Homes in Brighton rose in value by £81 a day in 2007 as the average property price burst through the £300,000 barrier, end-of-year figures reveal today.

Property prices rose 11 per cent - more than double the national average - according to a report from a leading building society.

Nationwide said the average cost of a property in the city was £307,606 in 2007 compared to £277,895 in 2006.

It means property prices in the city rose by an average £567 a week.

The city is ranked among the top ten hotspot areas in Britain which all show price rises well above the national average of 4.8 per cent.

The highest increase was in Belfast, which went up by 32 per cent, second was Aberdeen at 25 per cent, London at 16 per cent and Oxford and St Albans at 13 per cent.

Brighton and Hove's location and direct links to London have always made it a desirable area to live and demand for properties is high.

However, experts are warning the actual rate of increase is continuing to fall and prices are dropping in other parts of the country. It is believed expected cuts in interest rates in 2008 may encourage people to take advantage of cheaper mortgages.

But Nationwide believes it might not be enough to lure nervous buyers in more expensive locations like Brighton.

Nationwide chief economist Fionnuala Earley said: "It seems unlikely there will be a big recovery in activity and prices.

"Lower interest rates are more likely to stabilise the market rather than re-ignite it."

Peter Bolton King, of the National Association of Estate Agents, was more optimistic.

He said: "Despite the considerable doom and gloom lately, the figures show there is no need for pessimism.

"While the market is patchy, there are still house price hotspots. The Home Counties commuter belt and the West Midlands in particular are seeing healthy rises."

In October, The Argus revealed that flat prices in Brighton and Hove are expected to soar out of the reach of local buyers because of cash flooding in from London.

The average flat, currently worth £181,288, is forecast to cost more than a quarter of a million pounds by 2012.

It equates to a 53 per cent rise over the next five years and prices in the most sought-after areas of the city are expected by some to increase even more.

Estate agents said the city's housing market is continuing to rise above the national average because of an influx of buyers and investors from London.

Capital salaries and bonuses are being spent on second homes in Brighton and Hove, forcing prices out of the reach of those in Sussex looking for a home.

Flats in the Brunswick district of Hove are expected to leap in value by a massive 73.9 per cent, from an average £244,815 to about £423,529.

But predictions for 2008 are still uncertain.

In December the Council of Mortgage Lenders revealed the first year-on-year fall in mortgage lending for more than two years.

It said lending in November was £30.7 billion, down eight per cent from £33.2 billion for the same period last year.

The drop "clearly demonstrates the market slowdown has started," the CML said. Its director-general, Michael Coogan, said he expected the trend to continue into next year.

A report by the Royal Institution of Chartered Surveyors said house price growth remained negative and supply was still tight.

It predicted house prices would remain flat during 2008.

siobhan.ryan @theargus.co.uk