House price growth looks set to remain steady during 2004 as low interest rates and high employment levels continue to drive the market, economists predicted yesterday.

Commentators expect the price of property to increase by between four per cent and eight per cent during the coming 12 months, although the figure is down on rises of about 15 per cent in 2003 and 26 per cent in 2002.

Britain's biggest mortgage lender Halifax expects the cost of a home to rise by eight per cent during this year, which it said was close to the longer term average during the past 20 years.

Shane O'Riordain, general manager of group economics at Halifax, said: "The prospects for the housing market are good, with house prices gradually easing back to about eight per cent.

"If anything, the risk to our forecast is actually on the upside, as the three pillars that have underpinned the housing market during the last two years - low interest rates, good unemployment and good affordability - continue into 2004."

Price rises looked set to ease significantly in the North, where they have risen by almost 60 per cent during the past two years, while growth in London and the South-East would increase modestly.

But Halifax warned affordability problems faced by first-time buyers in the South were set to spread to the North and Midlands following recent strong price growth.

Nationwide Building Society is forecasting house price inflation of nine per cent for 2004, although it expects most of the growth to come during the early part of the year.

Tuesday January 06, 2004