The Royal Institution of Chartered Surveyors has said that it expects a rise in UK house prices of 4pc in 2006 and a further 4pc in 2007.

The predictions should be considered as RICS had accurately predicted an expected upturn of 3pc for 2005.

The modest pick-up in house price rises for next year reflects the impact of the August interest rate cut, as well as a lift from a further expected 0.25% interest rate cut in the first half of 2006.

With the housing market showing signs of a recovery from a marked drop in activity in the latter half of 2004, purchases are also expected to rise firmly in 2006, having fallen for two successive years.

RICS expects mortgage approvals to rise from a five year low of 1.127 million in 2005 to reach 1.336 million in 2006.