A leading mortgage broker is predicting higher property prices in 2006.

House prices will rise considerably in 2006, thanks to a favourable ratio to mortgage payments, according to one independent mortgage broker.

John Charcol predicts that house prices will have risen by 5.5 per cent by the end of 2006, largely due to an envisaged cut in interest rates.

Ray Boulger, senior technical manager at John Charcol, said that it had been a good second half of the year for the property market. He added that he expected the favourable trends that had helped this success to continue in 2006.

He commented: "Some confidence returned to the market after August's base rate cut. Transactions in the second half of 2005 were well above the preceding six months as vendors, who had been holding out for higher prices, accepted lower offers.

"Interest rates are by far the most important influence on house prices and the cuts we expect in 2006 should stimulate a gentle upward movement in prices as confidence and affordability improves further."

Mr Boulger also predicted that the government's decision not to allow residential property into self-invested personal pensions and its plans for shared equity schemes will see a greater number of first time buyers getting on the property ladder.