* Strong rally in UK housebuilders to slow next year
* Short interest rises, sector index falls in November
* No sign of bubble yet, but rate hike prospect a headwind
By Atul Prakash
LONDON, Nov 24 (Reuters) - UK housebuilders' shares have more than doubled in two years as home prices have recovered, but an uncertain interest rate outlook and rising costs mean gains look more modest - and more precarious - in 2014.
Government schemes, including the "Help to Buy" programme, which guarantees up to 15 percent of applicable mortgages, helped push house prices to an 11-year high by one measure last month, fuelling concerns about a potential bubble that could burst when interest rates eventually rise.
House prices will rise on average 4 percent this year and 5.5 percent next and even more in London, according to a Reuters poll of market watchers.
British finance minister George Osborne has played down talk of overheating and asked the Bank of England for annual recommendations on the impact of the Help to Buy programme, starting in September 2014.
Housing is politically sensitive in Britain. Home ownership is widespread, and rising or falling house prices are a major factor in consumer confidence. Critics say the government schemes are designed to prop up prices before a general election due in 2015.
There are signs the rally in housebuilders is losing momentum, with negative bets on the sector doubling in the past four weeks, while monthly net sales of real estate funds domiciled in Europe - including the UK - fell 70 percent in September from a year earlier, according to Lipper data.
"As a sector, they (housebuilders) had an extremely good run, but they are likely to take a breather. I am not encouraging people to pile into them," Charles Stanley analyst Tom Gidley-Kitchin said.
"I am not hugely positive, but also don't think that the market is going to crash over the next couple of years."
The Thomson Reuters UK Homebuilding index has surged 50 percent so far this year after a 64 percent jump in 2012, but fell 5 percent this month after hitting a record high in October. It has fallen in four of the past six months.
Markit data shows stock lending in the sector doubled over the past weeks, indicating an increase in short positions - a strategy under which investors sell borrowed stocks in anticipation of a decline in the price, hoping to buy back more cheaply later and pocket the difference.
Among the risks for the sector is the possibility that UK interest rates could rise sooner than expected as the economic outlook improves and the job market recovers.