House prices surge nearly 16%

UK HOUSE prices rose an average 1.5% in December, according to Nationwide. The property market's strong finish to 2003 means prices powered ahead 15.6% over the year despite widespread fears of a slump.

The rise means the typical house added more than £18,000 in value to just under £135,000 - equivalent to nearly £50 a day.

December's rise also represents a significant improvement on November's increase of 1.2%.

The north of England lead the way over the year with prices rising by more than 30%%, followed by Wales with a 25% increase.

Nationwide forecasts house prices will rise 9% in 2004. However, it expects most of the growth to come in the first half of the year as the momentum already built into the housing market carries over into spring.

Alex Bannister, group economist, said: 'Turnover during 2003 fell to the lowest level since the mid-nineties as first-time buyers stayed out of the market.

'The absence of first-time buyers comes as affordability becomes increasingly stretched for this group. Although unpleasant for those affected, the low number of first-time buyers is a sign that the market is cooling naturally.

'We would be concerned to see, as happened in the late eighties, buyers taking on ever increasing amounts of debt in order get onto the property ladder.'

The building society expects the North, Scotland and Wales to continue closing the gap on the south as the market slows.