HOUSE prices rose by 2.2 per cent last month - 16 per cent year-on-year - as property shortages continued to push up values.

That compares with 2.0 per cent monthly growth in December (15.4 per cent year-on-year), said Britain's biggest mortgage lender, Halifax.

At the same time, the average price paid by a first-time buyer breached the £100,000 barrier for the first time.

Prices paid by people taking their first step on the property ladder have soared by 22.6 per cent during the past 12 months.

Data from the Royal Institution of Chartered Surveyors showed there had been a nine per cent fall in the number of properties for sale during the final three months of 2003.

Halifax Estate Agents said this trend had continued into 2004 with property listings lower than they had been a year earlier.

Inland Revenue figures show the number of homes sold during 2003 fell by 16 per cent to 1.34 million - the lowest level since 1996 - but there are signs that the number of transactions has begun to increase modestly.

Halifax group economics general manager Shane O'Riordain said: "A strengthening economy should continue to support a strong labour market during 2004, underpinning healthy housing demand.

"Interest rates are set to rise further this year, which will act as a brake on the market.

"The extent of the rise is, however, expected to be modest and will, therefore, cause few problems for the majority of homeowners."