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House Prices 'to Continue Rising Next Year'

HOUSE prices look set to increase by nine per cent next year, according to Britain's biggest mortgage lender.

But Nationwide said it expected most of the growth to come in the first half of 2004, before rising interest rates and weaker income growth hit confidence.

The figure is slightly higher than the eight per cent predicted by Halifax earlier this week, but significantly lower than the 15 per cent prices are expected to have risen by in 2003. The increase in 2002 was 25 per cent.

Alex Bannister, Nationwide's group economist, said: "The housing market will carry considerable momentum into early 2004 and we expect house price growth to be biased towards the first part of the year.

"Later in the year, rising mortgage rates and slow income growth will dampen confidence.

"House price expectations are also likely to become more realistic, especially in the North where prices are currently rising at an unsustainable pace.''

He added that there would be less regional variation during the year, although price growth is still expected to be strongest in northern regions and Northern Ireland.