CONFIDENCE among construction firms has reached its highest level for four years despite the prospect of higher interest rates.

Monthly findings from the Chartered Institute of Purchasing and Supply (CIPS) out yesterday show no prospect of a let-up in growth rates for the sector.

CIPS said more firms were predicting higher activity in 12 months' time than at present, with the confidence barometer for March at 79.9 compared with 77.5 a month earlier. A figure of 50 indicates no growth.

Roy Ayliffe, CIPS director of professional practice, said: ''It is great to see that concerns about interest rates rising later in the year have not dampened confidence in the construction industry.''

Workloads have soared as the lower cost of borrowing buoys the housing market and contracts in the public sector boost civil engineering.

In the housing sector, a third of firms reported that activity was higher than the previous month - three times more than reported a decline.

The buoyancy comes as Britain's biggest mortgage lender said house prices continued to make strong gains during March, rising by 0.4 per cent. But the Halifax said there was some evidence the property boom was beginning to ease, as the rate of annual house price inflation fell from 16.9 per cent in February to 16 per cent last month.

Halifax said it was too early to say if March's figures signalled the beginning of a slowdown in house price growth, but added that all the indications suggested it would ease in the coming months as consumer confidence fell back.

The lender said that an easing in house price inflation combined with slower growth in consumer spending would help to reduce some of the pressure on the Bank of England's Monetary Policy Committee, which concludes its monthly meeting today.