Pundits who predicted a sharp correction in prices during the past year have been proven wrong by Nationwide’s 'winter survey' released yesterday.

The rapid rise in house prices continued into December with the price of the typical house increasing by 1.5%, compared with the 1.2% increase in November.

This means that house prices have risen by 15.6% over the last year, with the price of the typical house increasing by more than £18,000 to just under £135,500, says Alex Bannister, Nationwide's Group Economist.

Price growth in the north outstripped the rest of the UK with regional growth differential running at its highest level since 1990.

Commenting on the figures Alex Bannister, said: "2002 saw house price inflation moderate in all regions bar the North and Scotland, however the variation in regional growth rates is now at its greatest since 1990.”

“2003 was another strong year for the North (prices up 30%) and Wales (up 26%). The rise in Welsh property prices is notable, building on a 28% rise in 2002 and results in part from large falls in unemployment and strong employment growth in the region.”

“The rise pushed average prices in Wales, Yorkshire & Humberside and the North West above the £100,000 mark. At the other end of the country and the other end of the growth table were the Outer Metropolitan and London regions with prices rising 6% and 7% respectively.”

“Nevertheless, London and much of the South East enjoyed a relatively robust final quarter of 2003 following weaker growth earlier in the year. The turnaround follows improved prospects for City employment and bonuses.”

"The momentum that the market is carrying combined with the expectation that the economic backdrop will remain relatively benign suggests that prices will rise by 9% in 2004. We expect the regional growth differential to narrow as areas such as the North, Scotland and Wales see price growth slow.”