UK residential property prices in 2006 are set to benefit from predicted interest rate cuts and robust employment growth according to some industry analysts.

The Royal Institution of Chartered Surveyors (Rics) said it expected prices to rise by 4% in 2006 and by the same amount in 2007, following a 3% upturn this year. A pick-up in the property market is also set to boost mortgage approvals which are also expected to rise from a five-year low of 1.13m in 2005 to reach 1.34m.

Rics said: Low interest rates along with robust growth in employment go a long way to explaining why house prices have increased this year and will continue to do so next year.