House prices rather surprisingly rose in December by 1.1% following two consecutive reports of price falls in October and November by the Halifax. The average house in Britain now costs £162,086. However the Halifax continues to predict that average property prices in the UK will fall by 2% this year.

Although property prices last year rose by 15.1% overall, it was the smallest rise since 2001. Furthermore, price increases for the second half of 2004 fell to just 2.8%. Last year's rise was the smallest since 2001, when property prices rose by 11.7% across the year. In 2002, the market soared by 26.4%, but growth was reduced to 15.4% in 2003.

Martin Ellis, chief economist at Halifax, said: "Housing market fundamentals remain sound - a strong labour market, historically low interest rates and a shortage of housing supply - which should curb the extent of the downturn in the housing market and result in only a slight fall in house prices this year.

Following significant price rises over the last 18 months, property prices in Northern Ireland are expected to slowdown considerably in 2005. However it is expected that price rises will outperform the rest of the UK according to the Royal Institute of Chartered Surveyors (RICS).

RICS expects property prices to rise by 5% this year in Northern Ireland, in comparison to an average rise of 3% across the UK.

RICS housing spokesman Tom McClelland said: "RICS predicts that UK house prices will rise by around 3% in 2005 following an increase of 13% in 2004, which would be the weakest outturn in ten years".

The Northern Ireland market is unlikely to fare much better, with rises likely to be around 5%.

Mortgage Approvals Drop Dramatically.

Mortgage approvals have fallen for the sixth month in a row, only 77,000 mortgages were approved in November, which is the lowest level since 1995. The figure is down 43% in comparison to November 2003, according to the Bank of England, and is only just above the 73,000 monthly average witnessed during the last property crash in the 1980's, says the Guardian newspaper.

Speaking in the Times newspaper, Ed Stansfield of Capital Economics says: "Historically when mortgage approvals have been sustained below 90,000 a month, falls in real house prices have followed."

A property fund overseen by Aberdeen Asset Management logged the strongest performance for any British-based portfolio in 2004. The Aberdeen Property Share fund rose by 43.15% over the year to December 29, according to the fund research company Lipper. On average, funds rose by 9.67% over the same period.

Property investments have significantly outpaced assets such as bonds, cash and equities in 2004, sparking widespread interest in real estate assets from institutional investors as well as private clients.

House prices in Wales rose by 24.4% in 2004, according to new figures released by the Nationwide Building Society. Nationwide figures revealed that Neath Port Talbot remains a particular hot spot. Property prices in the area rose by 35% in 2004, following a 52% rise in 2003, making it the only authority area in the UK to appear in the hot spot list for two years running. Average property prices in Wales during the last three months of 2004 stood at £136,600. However house price increases across Wales are expected to be far more modest in 2005, with Nationwide estimating that prices will rise by just 2% this year. Nationwide group economist Alex Bannister said, "Whilst this cannot be guaranteed with certainty, indications are that following the downward shift in activity and price growth during late 2004, the housing market may be beginning to stabilise."