The surge in house prices looks set to slow next year as the housing boom draws to an end, according to a survey out this week.

The Royal Institute of Chartered Surveyors predicted that house prices would climb by six per cent in 2002 compared with growth of ten per cent this year.

Property transactions were expected to drop, with the market likely to be subdued until early summer, in line with the broader economy.

The Rics forecast that the number of transactions next year would be around 1.4 million - two per cent below this year's level.

Rics chief economist Milan Khatri said: "The economy is forecast to pick up in the second half of the year, which will provide support for the housing market.

"At the same time, it is likely that interest rates will rise, providing a restraining effect on housing demand and house price inflation."

The Bank of England has cut interest rates from six per cent to four per cent this year in an bid to revive the recession-hit manufacturing sector.

This has pushed mortgage rates to their lowest level in more than four decades, helping shelter the housing market from the global slowdown.

But economists believe that the bank will begin to increase the cost of borrowing once more as the United States economy begins to recover next year.

Some predict that while another interest rate cut could be made in February, rates will end next year at 4.75 per cent.

Last week, the UK's biggest building society, Nationwide, also forecast house price growth of six per cent next year.

But it said that while the rate of price increase would slow, no areas would see sustained falls in property values.