NORTH-East house prices fell at a firm pace in December according to the Royal Institution of Chartered Surveyors' monthly housing survey published this week.

However, while purchase inquiries and sales in the region have been in decline for several months, new instructions continued to rise moderately in December as they have done so over the last four months.

December's completed sales were equal to November's and marked the first time in nine months sales had not fallen.

RICS spokesman, Ian Perry, said: "Speculation that interest rates have peaked seems to have given encouragement to buyers during a period which is traditionally quite weak. The conditions for a mild pick-up in the housing market are in place for 2005, though any further significant rise in interest rates will knock back confidence."

RICS forecasts a modest recovery in house prices across the country and that steady interest rates and a favourable economic backdrop will lead to a 3pc rise in prices in 2005.

Stuart Allen from Broadley and Coulson, Bishop Auckland, said: "There has been a marked seasonal decline in the number of properties available for sale in this area. Houses are taking longer to sell with buyers driving keen bargains at below the agent's asking prices. Realistically priced properties are selling."

Ron Greig from Ron Greig Estate Agents, Hartlepool, said: "A reasonable level of sales was achieved during December in spite of low expectations and an increasing housing stock. The new year has got off to a brisk start with a substantial increase in inquiries but needs more properties coming into the market.

Prices are expected to remain stable."