JOB losses and factory closures were last night blamed for a crisis of confidence in the housing market that has seen falls of up to 13.5 per cent in parts of the region.

According to data compiled by Britain's biggest building society, the Nationwide, the average price of a home in the North-East fell by 2.1 per cent in the last four months of 2005.

In most other parts of the country the cost of a house is still rising, albeit slowly.

And the figure conceals much steeper price drops in some areas, most notably in County Durham where they fell by 12.6 per cent.

Experts blamed a bad year for factory closures and worsening economic conditions for the falls.

Analysts will be watching the next set of figures - for the first quarter of this year - to see if the decline continues.

Nationwide economist Fionnuala Earley blamed price falls in the North-East on a lack of confidence in job security, following a series of high-profile job losses, such as the closure of LG Philips' television tube plant in Durham.

Ms Earley told The Northern Echo last night: "We have seen strong house price growth in the North-East until recently, so it could just be that the market is correcting itself.

"But the North-East economy has seen a few high-profile job announcements in the last year, such as LG Philips, and although that doesn't affect overall employment levels, it affects confidence and also affordability.

"Job confidence has a direct impact on house prices, as people are more likely to pull out of the market if they are concerned about their jobs."

LG Philips ended production in Durham in July, with the loss of 800 jobs.

Spanish-owned bank Abbey also announced 235 job cuts with the closure of its call centre in Gateshead in March.

SCA Packaging said in November that it was closing one of its Darlington factories, with the loss of 170 jobs, and carpetmaker Hugh Mackay shut its Durham factory with the loss of 200 jobs last year.

The biggest drop in the North-East was in Middlesbrough, where prices fell by 13.5 per cent - in marked contrast to prices in Redcar and Cleveland, which rose by 14.9 per cent.

County Durham saw falls of ten per cent in Prime Minister Tony Blair's Sedgefield constituency, 10.7 per cent in Derwentside, and 12.6 per cent in Chester-le-Street.

Surveyors and estate agents reacted with some scepticism to the figures last night.

David Josephs, associate at Countrywide in Durham, and a member of the Royal Institution of Chartered Surveyors (RICS), said: "I am not aware of any significant drops, but certainly, prices are levelling off and the prime levels of activity have been in the lower levels of the property market.

"I am a bit surprised at the Nationwide's figures."

Tony Lewis, a quantity surveyor and director at Sandersons, in Darlington, and also an RICS member, said: "Certainly, at the end of July 2004, we saw the massive inflation in house prices start to level out, and prices have been broadly level since then, with the exception of minor rises and falls."

Across the UK, Nationwide said Northern Ireland saw the strongest growth in house prices, with 13.2 per cent.

In the English regions, the biggest house-price rise was in Yorkshire and Humberside, at 5.3 per cent, which were followed by the North-West, at 3.1 per cent