It looks as if house prices this year will end up around 13-14% said Nationwide today. However, despite the strong rise in property prices over the year as a whole, 2004 has been a year of two distinct parts, with prices rising by almost 12% over the seven months to July but by only 1-2% over the remainder of the year.

Last December Nationwide forecast house price inflation would be 9% by now but then, following an unexpectedly strong start to the year, this forecast was revised up to 15% in March.

So what are Nationwide forcasting for 2005?

The price of an average UK property will rise just 2% in 2005, said the building society in its forecast out today. As more realistic expectations about the housing market and interest rate implications begin to bite, Nationwide expect house prices to rise, but not at the frenetic pace seen in recent years.

"Following the increase of around 13% in house prices during 2004," said Nationwide's Alex Bannister, "we expect price growth in the 12 months to December 2005 to be in the range of 0 to 5%. However, the likelihood is that annual price inflation will end next year towards the lower end of this range. In contrast to 2004, monthly price increases are expected to be much more uniform across the year, although we are expecting to see small price rises in some months and small falls in others."

Monthly review

The building society also released its monthly review today, saying housing market activity was at its lowest for almost five years. House price inflation in November rose just 1% bringing the annual inflation to 15%.

Commenting on the figures Alex Bannister, Nationwide's Group Economist, said: “Following a three month period in which house prices have been broadly flat, the price of the typical house rose 1.0% (seasonally adjusted) in November."

"The annual rate of house price inflation eased to 15%, from 15.3% in October. The price of the typical property now stands at £153,439, just under £900 below the peak in prices back in July."

"As is highlighted by monthly price changes over the last four months, the trend in house price growth continues to slow and, importantly, so far the slowdown has been an orderly one."