Nationwide Building Society today said it expected house prices to rise by 15% during 2004 as the market remained strong.

The society said it had increased its forecast for the year from 9% after seeing the cost of property rise by more than 5% during the first three months of 2004 alone.

But it added that it still expected the market to slow down in the second half of the year, as consumers began to feel the effects of higher interest rates.

The increase in its forecast came as the society said prices rose by 1.4% during March, pushing the average cost of a home up to £142,584. On Monday property website Hometrack said it was doubling its forecast for price rises in England and Wales for 2004 to 8% from 4%.