Nationwide Building Society today said it expected house prices to rise by 15 per cent during 2004 as the market remained strong.
The society said it had increased its forecast for the year from 9 per cent after seeing the cost of property rise by more than 5 per cent during the first three months of 2004.
But it added that it still expected the market to slow down in the second half of the year, as consumers began to feel the effects of higher interest rates.
The increase in its forecast came as the society said prices rose by 1.4 per cent during March, pushing the average cost of a home up to £142,584 sterling.
Yesterday, property website Hometrack said it was doubling its forecast for price rises in England and Wales for 2004 to 8 per cent from 4 per cent.
Mr Alex Bannister, Nationwide's group economist, said: "The strength of house price growth over the first quarter has been widespread, with most regions experiencing a pick-up in growth compared to the fourth quarter of last year.
"We remain confident that price growth will moderate during 2004 in response to higher interest rates - we expect base rates to reach 4.75 per cent by the end of the year.
"However, the stronger than expected start to the year has led us to revise up our forecast for house price growth to 15 per cent from 9 per cent."
PA