Average house prices by region

North Wales �68,165 Mid Wales �74,386 West Wales �62,663 South East Wales �78,628

But there is evidence to suggest that prices have fallen in some parts of the country, notably those hit by industrial job losses.

In 2001, house prices rose by 9.8% in Wales according to statistics released by the Principality.

This is the fastest rate of growth for Welsh house prices recorded by the firm in the last 10 years.

Across Wales, the average house price is now �71,804.

Cardiff continues to lead the way with an average house price of �93,107, up 11.5% on the year, although every region in Wales saw increases in excess of inflation.

Society chief executive John Mitchell said low interest rates kept the property market buoyant during 2001.

Confidence will remain the key to the strength of the housing market

John Mitchell, Principality Building Society

The society said a shortage of affordable homes in Cardiff has apparently pushed many first-time buyers out to satellite towns like Caerphilly and Talbot Green.

And the building society is predicting more of the same for 2002 but there is a note of caution.

Mr Mitchell has forecasted that interest rates will start to rise later in the year and this will in turn dampen down price growth.

"Looking forward 12 months, confidence will remain the key to the strength of the housing market," he said.

"With mortgage rates at their lowest level for 40 years, house prices rising steadily and consumer spending likely to remain buoyant, I expect the current strong housing market to continue into 2002.

"Hopefully, the UK will avoid the global recession in spite of recent worldwide events.

"Nevertheless, there will come a point later in the year at which interest rates will start to rise and this is likely to result in house prices growing less strongly than in 2001. "