House prices expected to soar as boom heads North

Experts predicted yesterday that four of the 20 local authority areas most likely to see the biggest price rises in 2003 would be in the region.

The prediction came as estate agents said that the Christmas and New Year break had failed to dampen buyers' enthusiasm.

Lee Smurthwaite, of Stuart Edwards estate agents, which has branches in Darlington and Newton Aycliffe, County Durham, said trading had been "absolute bedlam".

He said: "The phones have been ringing non-stop. We've sold five houses already.

"Christmas is normally a natural break, but the housing market is just crazy at the moment."

A study by building society the Nationwide predicted that Darlington, Durham, Scarborough in North Yorkshire, and Stockton, would be among a number of "previously unfashionable" northern towns and cities to see the biggest house price rises this year.

Property values are expected to increase by more than 15 per cent on top of rises already recorded.

This contrasts with the picture in the South-East, which has recorded some of the biggest increases in recent years, but is now at greatest risk of a fall.

Experts describe a ripple effect in house prices, which began in the South-East but has transferred to the North.

The threat to jobs of a high proportion of white-collar professionals in the South, such as those working in finance and banking, is also thought to be hitting prices there.

Mr Smurthwaite said: "Places like London had some huge price rises about a year ago and then things tailed off.

"Here, a year ago people were viewing about a dozen properties before buying, but now it's only about two or three and they're not quibbling about the price."

Paul Reynolds, chairman of the North-East branch of the National Association of Estate Agents, said low interest rates were making an impact.

He said: "There is an awful lot of demand for housing, which in turn is leading to a shortage of stock."