HOME owners in the south have been given this shot-in-the-arm message from economists: "Your house will still make money for you this year."

Price growth looks set to remain steady during 2004 as low interest rates and high employment levels continue to drive the market.

There had been fears that house prices had peaked, but commentators expect the price of property to increase by between four per cent and eight per cent during the coming 12 months, although the figure is down on rises of about 15 per cent in 2003 and 26 per cent in 2002.

Britain's biggest mortgage lender, Halifax, expects the cost of a home to rise by eight per cent during 2004.

Shane O'Riordain, general manager of group economics at Halifax, said: "The prospects for the housing market are good, with house prices gradually easing back to about eight per cent.

"If anything, the risk to our forecast is actually on the upside, as the three pillars that have underpinned the housing market during the past two years - low interest rates, good unemployment and good affordability - continue into 2004."

Nationwide Building Society is forecasting house price inflation of nine per cent for 2004, although it expects most of the growth to come during the early part of the year, before rising mortgage rates and slow income growth dampen confidence. It expects rises of between zero and five per cent in south-eastern regions.

Ray Boulger, of mortgage broker Charcol, said the chances of a crash were "exceptionally remote", and it would take a large rise in interest rates to trigger one. He expects prices to rise by seven per cent during the year.

He added that he expected base rates to finish 2004 at about 4.25 per cent, and said the price of fixed rate mortgages may have peaked as the market realised rates would not rise as much as it first thought.