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Nationwide predicts 8% rise in 2007

Nationwide has predicted that house prices will increase by up to 8% in 2007.

Although 2006 saw double-figure growth, Nationwide predict stable interest rates and supply constraints will underpin the market in 2007.

This news comes as the lender releases its latest house price index, revealing that house prices increased by 1.2% in December bringing annual rate to 10.5%.

Average prices rose from 172,185 in November to finish the year at 173,746.

Fionnuala Earley, group economist at Nationwide, says: “The temperate weather of 2006 is likely to have played only a minor role, but the housing market clearly warmed up during the year.

“House prices increased three and a half times faster than last year and returned to double digits for the first time since February 2005.

December’s increase of 1.2% brought the annual growth rate up to 10.5%, way above the widespread expectation this time last year that annual house price growth would be in low single digits.”

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