The Centre for Economics and Business Research (CEBR) has suggested that Britain’s housing boom will continue in 2007, with average prices rising by 1,000 pounds a month.

It’s more good news for home-owners and bad news for aspiring first time buyers, but, the CEBR said it saw no evidence that increased interest rates would hit the cost of homes.

Outlining its findings in The Observer, the CEBR believes house prices will increase by 7.6% this year.

Following this, slower growth is expected in 2008 and 2009 before accelerating again in 2010.

Recent interest rises are not expected to cool off the market. John Ward, one of the reports authors said: “The underlying fundamentals of the housing market continue to support prices.Even though interest rates may act as a dampener on the market people are spending considerable less of their incomes on mortgages than in the early 1990s.

Furthermore, in many parts of the country, shortages remain acute.”

The average UK house price was £187,000 and was likely to be £225,000 by 2010, the CEBR added.