However, affordability and accessibility for first-time buyers will continue to worsen.
RICS expects house growth to slow slightly in 2007, but activity will remain high with demand outstripping supply. A further interest rate rise to 5.25 per cent is likely in the coming months and will help cool the market in the New Year although conditions will remain healthy.
Repossessions will rise as affordability conditions worsen, but the overall strength of housing demand will limit the negative impact on prices. This contrasts with experiences in the early 1990's where prices dropped following sharp interest rate rises.
RICS believes that commentators, such as Morgan Stanley, have overplayed the role of buyer expectations in house price gains. The market is not in danger of correction as factors such the economy and the strength of the job market have a far stronger short-term impact on the market with buyer expectations taking a long-term view.
A slowdown in the housing market will not aid affordability or accessibility for first-time buyers as prices continue to outstrip incomes.
RICS expects London, the South East, Scotland and Northern Ireland to out perform national average house price increases in both 2007 and in the next five years.
RICS economist David Stubbs said: "The strength of the market this year has been surprising. Indications are the market will retain significant momentum through the first half of 2007 due to solid economic growth and rising employment.
"The bleak outlook for first-time buyers looks set to darken further as house prices rise faster than incomes and the Government holds the stamp duty threshold at £125,000.
"Increasing gloom for those trying to get on the property ladder won't have significant impact on the housing market as demand remains strong, disposable income is growing and buy-to-let investors substitute for first-time buyers at the bottom end of the market."
