London and the South-east expected to fuel house price inflation

UK house prices are expected to increase 5-8% in 2007 with London and the South-east fuelling the rise.

The first half of the year will be the strongest as a buoyant economy, stable interest rates and a shortage of housing supply will lead to double digit house price inflation. However house price inflation will move back into single digits, according to forecast from Nationwide Building Society.

London will again see some the biggest rise with house prices predicted to increase 10%. Factors effecting London house prices next year include big city bonuses and infrastructure investment as part of the build up to the Olympics.

Homeowners in Scotland and Northern Ireland can also expect big gains in the value of their property with prices rising on average 9% and 12% respectively. But in the North and the Midlands will see a more modest rise of around 3 to 4%.