House prices predicted to spiral

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House prices predicted to spiral

The UK's largest building society has revised its forecast for house price growth for 2004, from nine per cent to 15 per cent.

Nationwide predicted that prices would leap higher than initially expected after property prices shot up by more than five per cent during the first quarter of the year and rose by 1.4 per cent in March alone.

Property prices increased by 16.7 per cent over the last year and Nationwide's monthly house price index predicts that housing market growth is unlikely to slow down much in the near future.

Wales saw the biggest increase over the last year, with a jump of 36 per cent, while the North saw the second-highest rise of 33 per cent. Liverpool, the 2008 European city of culture, saw larger house price rises than any other town in England and Wales.

The London housing market appears to be cooling somewhat with less than a one per cent rise recorded in the first quarter of 2004. The average property in the UK now costs £142,584.

Alex Bannister, group economist at Nationwide, said: "We remain confident that price growth will moderate during 2004 in response to higher interest rates - we expect base rates to reach 4.75 per cent by the end of the year.

"However, the stronger than expected start to the year has led us to revise up our forecast for house price growth to 15 per cent from nine per cent. London property prices are now expected to grow at around ten per cent, with increases of 20 per cent foreseen in the North, Wales and the north-west. The rest of the UK will be clustered around 15 per cent."

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