THE North-East housing market is recovering steadily but there are no signs it will return to a pre-recession boom, said one of the region’s major lenders.

This month, the average price of a house across the UK hit £250,000 for the first time, according to official figures, fuelled by rapid rises in London and the South-East. It has led to concern in the industry that a housing bubble could develop this year.

But the figures vary wildly across the UK, with prices in London growing 12.3 per cent, more than twice the English average.

The picture in our region is one of more gradual recovery, said Angela Russell, deputy chief executive of Newcastle Building Society.

In its results for last year, the Newcastle reported a 33 per cent increase in profit before tax from £1.5m to £2m, while operating profits were up to £10.6m from £10.4m.

Mrs Russell pointed to a doubling of lending to first-time buyers as an encouraging sign that the North- East housing market was on an upward curve.

“There is quite a difference geographically, with prices rising strongly in the South-East, but we are definitely seeing more confidence in our region,” she said.

“We are seeing increasing demand generally. It is very encouraging to see more first-time buyers getting onto the property ladder.

That could be due to people being prompted to buy following reports in the media of rising house prices.”

She believed the more cautious approach in the industry and a tighter regime of industry regulations would prevent the sector from overheating.

Her comments came as Yorkbased Persimmon stepped up its house-building programme with plans to open 90 sites in the first half of the year.

Profits at the builder rose by more than 50 per cent last year, thanks in part to the Government’s Help to Buy scheme.

Its plan to step up building activity was revealed as the housebuilder reported underlying profits jumped 49 per cent to £330m last year, while sales broke through the £2bn mark, up by a fifth.

Nicholas Wrigley, group chairman, said the strong performance was driven by a 30 per cent surge in completions in the second half of the year as Persimmon reacted to the gathering recovery.

He said: “The group entered 2014 with a very strong forward order book and the early weeks of the spring selling season have been encouraging, with our weekly private sales rate per site being 22 per cent ahead of last year for the first eight weeks.

“We anticipate a further year of encouraging sales growth in 2014.”

He added that already forward sales were 41 per cent ahead of last year at over £1.4bn.