Belfast Briefing:Weather and economic forecasts have turned decidedly chilly in Northern Ireland since the new year arrived.

There is nothing like snow to make people miserable in the North but add a slowdown in house price growth and the prospect of tougher economic conditions to come and it all adds up to a very frosty start to 2008.

Latest house price research from the Nationwide Building Society has shown the first fall in property prices in six years. In the last quarter of 2007, the rate of slowdown in the North was faster than in any other part of the UK - although it is still outperforming every other region.

In the first half of last year house prices grew in Northern Ireland by 55 per cent; during the final three months, prices increased by an annual rate of 24.2 per cent.

But when it comes to the property market in 2007, Northern Ireland cannot really complain. House prices rose on average by a staggering £120 a day - the average price of a house now stands at £303,739 - which is way above what the majority of salaries can afford in the North.

Nationwide believes the affordability factor will cool demand for houses next year and it is predicting property prices could fall by as much as 4 per cent in 2008.

Annual house price growth has slowed right across the United Kingdom prompting calls for the Bank of England to cut interest rates again when it meets this Thursday.

An interest rate cut might also help boost consumer spending in Northern Ireland but, according to the Bank of Ireland, with or without further cuts, the North's economy could be heading for a cold spell.

In a new report published today, Alan Bridle, head of research at Bank of Ireland Northern Ireland said he expects the local economic climate to become somewhat "overcast" as the year progresses.

First Trust Bank previously estimated that real GDP growth would settle at 3 per cent next year. Bridle thinks this is optimistic - he believes it will be closer to 2 per cent because of a combination of slower growth rates and more challenging business conditions.

He is warning that any potential rise in the cost base could pose a real challenge for businesses, particularly small to medium-sized companies.

Bridle claims there are a number of reasons why the North will experience slower growth rates this year.

First there is going to be a reduction in public spending at home, secondly economic conditions in its two key external markets - Britain and the South - will cool slightly and thirdly the property slowdown will have broader negative impacts on certain professional and business services.

Bridle also believes that consumers in the North will spend less because their purse will be under pressure from domestic rate bills and higher food and petrol prices.

It is not exactly the optimistic picture one would hope for at the beginning of 2008 but there is one positive aspect that has been highlighted by the leading economist.

Bridle believes sterling will retain its competitive rate against the euro which would in turn support commercial and retail activity.

Business confidence on an informal level remains high in Northern Ireland. The North was the second fastest growing region in the UK last year. Sales and exports by manufacturing companies rose to more than £14 billion in 2006/07 and the unemployment rate is currently at an all time low of 3.7 per cent.

There are, of course, concerns about the impact of the global credit crunch but it is weighed up against the fact that, for the first time in decades, the business community began trading in 2008 in a politically stable environment.

The new chairman of one of the North's biggest business bodies, the Confederation of British Industry, believes it is an exciting time. Brian Ambrose, chief executive of George Best Belfast City Airport, says the Northern Ireland Executive has moved the economy centre stage and it is now up to the business community and everyone in the North to work together to deliver results.

The Stormont government does not have all the answers to Northern Ireland's economic problems but it is trying and that is a huge step forward. It may have lost the battle on trying to get the North's rate of corporation tax harmonised with that in the South but there will be other campaigns to pursue.

And it appears luck may be on their side - the UK's National Lottery has just revealed that Belfast is one of the luckiest cities when it comes to winning money. In the last 13 years, more than £200 million in prize money has been scooped by people in Northern Ireland. Maybe all our economy minister needs to do is buy a ticket.