THE rate of house price increases continued to slow during August, but were strongest in the North-East, Government figures showed last night.

The Office of the Deputy Prime Minister's house price index showed the cost of property increased by 14 per cent during the year to the end of August, down from 14.6 per cent for the year to the end of July.

At the same time, the average price of a property rose slightly month-on-month to £159,010 in August, from £156,273 in July on a non-seasonally adjusted basis - a 1.8 per cent rise.

During the year to the end of August, price rises were strongest in the North-East, where the cost of a home soared by 26.3 per cent, while in London they grew by only 8.9 per cent.

London remains the most expensive place to buy a home, with property costing an average of £245,378.

Scotland is the cheapest at £96,413, followed by the North-East at £100,891.

Annual price growth in England slowed from 14.8 per cent the previous month to 13.9 per cent in August, with only northern regions and the East Midlands reporting a rise in the rate of growth.

But Scotland, Wales and Northern Ireland all reported an increase in annual house price inflation, with Northern Ireland showing the biggest rise from 4.6 per cent in July to 8.5 per cent in August.

First-time buyers paid an average of £123,469 for a property during August, while former owner occupiers paid £182,907.

David Bitner, head of product operations at The MarketPlace, at Bradford and Bingley, said: "The figures are not unsurprising.

"Interest rates are at an all-time low and there were good fixed-rate products available in June and July.

"It will be interesting to see if we get the usual slowdown in November and December. There is still significant demand within the housing market.