House prices will rise by a modest four per cent next year, the Halifax has predicted.

It forecast that the housing market in 2001 will be relatively healthy, underpinned by favourable economic conditions and a background of affordability.

But weakening economic growth will mean house prices and buying and selling activity will be constrained, with prices set to rise by only around four per cent during the year.

The north-south divide - which saw property prices in the north lagging behind soaring prices in the south - should narrow slightly by the end of 2001, the Halifax also predicted.