KNIGHT Frank Estate Agents has predicted a five per cent fall in house prices, but the future for the South Hams looks brighter, according to local estate agents.

Grainne Gilmore, head of UK residential research at the business, said: 'After rising by around 1.3 per cent this year, Knight Frank forecasts that mainstream UK house prices will fall by five per cent in 2012.'

Neil Parker from Fulfords in Kingsbridge said: 'I generally agree with the forecast countrywide of a five per cent decline, however I realise that we are fortunate in the South Hams that the market is driven by different factors.

'Although there was doom and gloom over the ability to raise funds last year, we did have success with the lower end of the market, particularly with investors looking to buy to rent out either on assured shorthold or holiday lets. I think this trend will continue in 2012 due to the dismal rate of saving interest and the continued demand for quality property.

'We can also see an increase in demand for higher end properties which we can service through our local network of offices in the South Hams.

'Generally, in my opinion, I can see prices staying stable or increasing by five per cent over the forthcoming year but it is crucial that vendors are realistic and are open to advice in what is going to be a fast-changing market.'

Christopher Kivell from Stags in Kingsbridge said: 'As far as 2012 is concerned, I think it will be interesting and challenging in equal measure.

'2011 has been the best year Stags have ever had in Kingsbridge, selling more properties than in any previous year, so clearly there wasn't a lot wrong with the market.

'There are, however, several unknown factors which will pose specific challenges in 2012, not least the ongoing uncertainty in the Eurozone and the continued unwillingness of the banks to lend to individuals and small businesses.

'Markets of all type react badly to uncertainty and that is what is holding many people back from making a positive decision (to buy or sell) at the moment.

'In addition, it may well be that the jubilee celebrations and the Olympics prove to be a distraction for some in the summer.

'However, the South Hams has long been seen as a wonderful place to live and an excellent area to invest in property and, as such, it is often somewhat cushioned from what is happening in the real world.

'If pushed for some kind of prediction, I would say that 2012 overall will prove to be a year broadly similar to the year just gone, with little or no growth but with prices remaining stable.'