THE housing market in Worcester has made a booming start to 2005, despite suffering one of its worst months for a long time in December.

Local estate agents reported a bleak Christmas, with houses being put on the market for lower prices and selling for less than the asking price.

But James Hickling, a valuer at Town & Country estate agents in Foregate Street, said while the city had been through a bad time, this January had been the busiest in years.

"With interest rate rises last year, things did cool down and during the last six months people were very indecisive.

"There was a lot more negotiating and house prices were dropping.

"However, the last couple of weeks have been the busiest for a long time and people are regaining their confidence.

"There are still a lot of good deals out there, but the market is a lot more stable. It is a great start to the year - business is booming."

Internet estate agents Rightmove.co.uk found that house prices in the city cooled by 1.8 per cent in December.

Carole Bradley, director for Connells, of Foregate Street, agreed the month had been bad, but again confirmed things had improved rapidly during the past few weeks.

"Prices were more realistically priced in December and we found in some cases they were going for below the asking price," she said.

"We haven't found ourselves in the crash which some people predicted and 2005 has started exceptionally well - we are really busy."

A spokesman for the internet site fish4homes.co.uk said the national picture was similar.

"No one is concerned by last month's market - it is always quiet at Christmas," said Janet Irwin, homes sales manager for Fish4Homes.

"As far as we can tell, there is not going to be a great slowdown, and if interest rates go down, as predicted, it could get a lot better."