Hometrack: House prices up 5.7% in 2006

House prices are rising faster than they have since July 2003, Hometrack reveals, going up 5.7 per cent in the last 12 months.

In December the average property in the UK rose 0.3 per cent, which is less than November's increase of 0.6 per cent but still more than in the same month last year.

While national average house prices are rising faster than they have for years, some regions are performing far better than others.

In London house prices are up 12.1 per cent, more than double the rise anywhere else in the country, while house prices in the north of England and the East Midlands are almost static - rising less than a percentage point in the last 12 months.

"The big story of 2006 has been the strength of the bounce-back in London prices after the under-performance of values in this region between 2001 and 2005," said Richard Donnell, Hometrack's director of research.

And despite two quick-fire rises in interest rates, the property research firm expects the market to stay strong in 2007.

"In the absence of any external shocks to knock market sentiment, the demand for housing in 2007 will continue to be influenced by short-term expectations over interest rates and the prospects for future house price growth," Mr Donnell said.

Hometrack predicts house prices will rise four per cent in 2007 - with property values in London and the south-east leading the way.