US broker Merrill Lynch is predicting another year of solid house price growth in the UK.
London will lag the rest of the UK, however, given it is highly geared to financial markets and the technology sector.
UK economist Mr Ian Stewart reckons house prices in 2002 will rise by 8 per cent, higher than the current consensus forecast of 6 per cent.
"We don't expect to see much decline in the pace of growth of prices until rates start to rise, probably in the second half of the year," he said. "Our year-end target for interest rates is 5 per cent".
London however won't perform so well, said Mr Stewart, who is predicting modest, probably positive gains in the capital, but well below 8 per cent.
"Valuations here are stretched and the economy is geared into financial markets and TMT [Telecom, Media and Technology sector]," he said. "While London housing has outperformed other regions in the recent past and over the long term, the early 1990s crash hit the London market hard".
House prices have surged strongly since the early 1990s crash and in 2001 surprised on the upside, rising by 13.8 per cent, according to the Nationwide.
AFP