YOU may not think it, but houses in the North-East are still a relative bargain when compared to others around Britain - despite more than doubling in price in the last five years. Housing experts say buyers will still get more for their money in this region than many others, even though a two-bedroom, basic town centre terraced house can fetch as much as £70,000.

The lack of affordable housing against the ever increasing demand has pushed the cost of buying a property in the North up 20 to 30 percent in the last year alone. And forecasters have claimed that the sharp rise is likely to continue for the next year at least, as two recent interest rate increases have failed to take the heat out of the market. That means more frustration for first time buyers who are finding it extremely difficult to afford anything.

Stephen McOwan, a director of Sandersons Estate Agents in Richmond, North Yorkshire, says he believes the high divorce and separation rate, with one in three marriages failing, is largely to blame for the lack of housing. As couples break up, they put the family home on the market, but then need to buy two properties in its place.

However, a healthy labour market and low interest rates are also responsible for the growth in buyers. "Demand is outstripping supply and there is no sign of that returning to an equilibrium this year, so prices will undoubtedly continue to rise," Mr McOwan says. "There has been, on average in the last year, between 25 and 50 percent increases on properties in the area, depending on the type of property and location you are looking at. There are some houses that have gone up 50 percent in value in the last year."

The increase has been across the board, but Mr McOwan says there has been a phenomenal growth in the middle market. Houses that only a few years ago were worth between £100,000 and £250,000 are now worth between £250,000 and £500,000.

Just ten years ago, £120,000 would have bought you a nice four or five-bedroom period terraced house, maintained to a high standard and with gardens, in the Richmond area. Four years ago, while diminishing somewhat, that would have bought you a two or three-bedroom cottage in a nice village location, or possibly a three-bedroom detached house in a market town.

However, few houses are now available for less than £100,000, putting a massive strain on the first time buyer market. And that does not apply to North Yorkshire alone: it is the same the region over. While many banks and building societies are offering to lend more to enable first time buyers to get on the ladder, the fear is that some borrowers will buckle under the strain of high repayments.

"There are no signs of it abating at the moment, and I don't think prices will ever come down - they will just level off," adds Mr McOwan. "However, we are still considered the poor relation when it comes to the whole property market on a national level. Somebody in the North-East will still probably pay half of what you would pay in the likes of York or Leeds for the same kind of property."

The Royal Institute of Chartered Surveyors (RICS) says while house prices in the North-East were still below those in the South, the greatest increase had been in the North. And RICS chief economist Malan Khatri says the favourable prices in the North were attracting buyers from the South to invest in properties, rather than unstable pensions, which add to the demand, creating a buoyant buy-to-let market.

He says the North-East saw a 21.7 percent increase last year - double the national average - while London saw just a five percent increase. "Nationally, we are expecting a rise in prices of about six percent this year, based on the Government's Price Index, but some estate agents are forecasting eight or nine percent," he says. "But for the North-East, while we don't have a specific increase forecast, we expect it to at least go into double digits for this year."

Bradford and Bingley's manager for the Teesside area and surrounding villages, John Newhouse, says while the gap is closing between the North and South, it is still cheaper to buy property in this region. "It's still very good value in the North-East compared with other parts of the country," he says. "But, in saying that, the property market in this region in the last five years has basically doubled. 2002 saw a 30 per cent rise and last year saw a 20 per cent rise."

Mr Newhouse says although a great number of people were getting their houses valued, only about 30 per cent of them are going ahead and putting their property on the market. In the past, he says, he would have expected 50 per cent to sell. As a result, he estimates there are ten buyers to every house on the market, which creates high competition and pushes prices up. However, despite the terrifying prices, he recommends first time buyers put off no longer and get on the ladder as soon as possible, as prices are unlikely to come down or level off soon.

"There are a lot of people considering it and wanting to move but are fearful of putting their house on the market in case it goes quickly and they have nowhere to go to," he says. "We have at least ten buyers for every one house, so we get a lot of competitive bidding. We would expect a house to be bought up in no less than two weeks, but no more than four weeks, so people looking have to get in quickly.

'IN a high number of cases we have not even got the brochure out when someone puts in an offer. We had a two-bedroom property in Yarm that received 11 viewings on the first night and went the very next morning. Buyers have to be quick on their feet and ready to go."

Mr Newhouse says while all properties in the North-East have risen, some areas are considered hotspots, such as Yarm, Eaglescliffe, Darlington, Nunthorpe, Marton and any village close to a major town or city. However, once prices rise in one area it simply creates a ripple effect and prices increase everywhere.

"In Stokesley (North Yorkshire), I would say £150,000 is the starting point - that would be for a two-bedroom cottage," he adds. "In Stokesley, there is a massive shortage of houses coming on the market. In Yarm, there is very little for under £100,000. And a four bedroom detached house in Stokesley now exceeds the national average."

But Mr Newhouse says while he does not believe the rise will slow this year, by next year it could be a different story. "I think next year we will start to see a levelling off, but we won't see prices drop. There may possibly be just a five per cent increase in 2005. The market historically is worked on a ten-year cycle, so realistically we are about to buck the cycle, but at the moment it is still very buoyant.

"My advice to first time buyers is to get on the ladder as quickly as you can. Right now, we can only see them continuing to rise."