The property market marches on

They show that property prices rose 1.8% during December, giving an annual increase of 15.4%. The average property is now worth �142,033.

In November, prices rose by 1.1% giving an annual rate of 14.1%.

However, the Halifax - along with other housing experts - expects the housing market to cool this year, with prices forecast to rise by only 8%.

VOTE RESULTS What will happen to UK house prices in 2004? Keep on soaring 6% Small gains - up to 10% 36% Tread water 15% Falls in some areas 24% Market crash 19% 45760 Votes Cast Results are indicative and may not reflect public opinion Vote now closed

Halifax's figures were similar to last week's survey from the Nationwide Building Society, which reported a 1.6% rise in December and a 15.6% increase over the year.

The Nationwide is expecting prices to rise by 9% during 2004.

Cooling not crashing

The galloping property market over the past few years has raised fears of a price crash.

But the Halifax said the "three pillars" that have underpinned the market in recent years - low interest rates, low unemployment and good affordability - would continue during 2004.

However, the bank said the market would continue to cool as factors such as the recent rise in interest rates by the Bank of England began to take effect.

"The housing market is undoubtedly strong," said the Halifax's Shane O'Riordain.

"But there are clear signs that the market will continue to slow down naturally as the impact of higher interest rates and the reduction in the number of first time buyers entering the market continues to kick-in."

The Halifax said it thought the Bank of England would raise interest rates from the current level of 3.75% to about 4.5% by the end of the year.

But it added that even allowing for this rise, mortgage payments would still remain affordable.

Regional trends

Halifax declared 2003 to have been the "Year of the North" with prices in the north of England soaring by 33.7% - more than twice the average rate.

At the other end of the scale, prices in Greater London rose 8.6%, the South West of England recorded a 6.7% increase while the South East came bottom with a rise of 5.8%.

However, the more modest rises came in areas where prices were already high, and with the rest of the country beginning to catch up, first-time buyers are facing an increasingly difficult task to get onto the property ladder.

The number of first-time buyers entering the property market is now at its lowest level since records began in 1974, the Halifax said.

During 2002, 526,300 first-time buyers purchased a property, but during the first 11 months of 2003 the number had dropped to 330,540.