* House prices in the UK to rise by two per cent
* Bank of England base rate to peak at five per cent
Barry Naisbitt, Abbey's Chief Economist said: "There is now clear evidence that the rate of annual house price growth is slowing. We expect annual house price growth to slow substantially - by the end of next year we predict it to be around 2%.
"It is our view that there will not be widespread falls in house prices next year. Overall economic performance is likely to remain strong, with employment high, unemployment low and inflation under control. There is, however, always a risk that prices could fall and the Bank of England has drawn attention to its view that the possibility of house prices falling is now higher than before.
"We expect that if inflationary pressures were to start to build, base rates would be increased further next year. However, on the basis of current trends and actions already taken, base rates might not rise much further. It is entirely possible that base rates could peak next year at 5%, a full 1% below the previous peak at the start of the decade."
