By Ross Finley

LONDON (Reuters) - House prices will stagnate this year and next and there is a two in three chance that prices fall on an annual basis at some point in 2008, a Reuters poll of property market analysts showed.

The survey calls a definitive end to a decade-long housing boom, fuelled on cheap credit, that paused briefly three years ago but is now reeling from a slowing economy, debt loads, and the grip of a global credit crunch.

Nearly all of the analysts polled said UK housing was too expensive compared with fundamentals, but only by a median 15 percent, the same as three months ago. Some rated British homes as very overvalued, with estimates as high as 40 percent.

But in a group -- as they have been many times over the boom that has tripled average house prices over the past 10 years or so -- economists were not willing to forecast a property price fall to bring affordability back in line.

The findings come as the Bank of England deliberates on whether to cut interest rates a quarter point to 5.25 percent on Thursday, after a cut in December that took many in financial markets by surprise.

"We will almost certainly see a negative annual rate of inflation in some parts of the UK in 2008," said Fionnuala Earley, chief economist at Nationwide building society, predicting overall flat house prices this year.

SMALL ISLAND

In the UK, there have been many signs in recent months that the housing market has not only come off the boil but is in danger of scalding new homeowners who have just been handed the front door keys in exchange for a pile of debt.