House prices in the South East are rising above the national average and threatening a boom and bust cycle.

Figures released today showed prices rose 15.8 per cent in the last year - the national average was just under 14 per cent.

The average price of a property in the South East has reached £117,566 in the last quarter of 2001.

David Maslen, of David Maslen estate agents, said: "It is good for the economy providing it doesn't run away with itself.

"It has got to be managed and kept under control. It is a good sign providing it is gradual.

"I think this year will be a good year for house prices on an upward trend but you would not want it to go any more than 15 per cent.

"Otherwise it will begin to run away with itself and everything will follow suit, prices will go up, cost of living will go up, and you are back into this boom and bust cycle.

"I think 15 per cent is the most you would want prices to go up and I think this year will see a more modest increase."

The economic slowdown and the events of September 11 have done little to dampen consumer confidence, according to the survey.

The building society said 2001 was the strongest year of price growth since 1988, with average property prices rising by £11,000 during the 12 months.

However, Nationwide building society, which carried out the survey, said some areas which had seen double digit increases for the past six years would see growth slow.

Danny Allen, of Cambridge Residential Sales in Western Road, Hove, said rising prices were the result of the high demand for property in Sussex.

He said it showed strong consumer confidence, an important indicator in the strength of the economy for the coming year.

He said: "There was some talk of the market going quiet before Christmas but that always happens. Overall the year on year rise shows we have a strong economy.

"It is good for us and our clients because we are making people more money."