London and the North take lead in property price rises

It has not been grim up North for house prices this year, as Bradford, Leeds and Hull emerge among the UK's property hotspots of 2005.

The last monthly house price survey from the property research company Hometrack also puts West Yorkshire and Derbyshire among only three counties to have shown increases in average prices over the year, while the national picture from its poll of 7,500 estate agents shows a 1.3 per cent decline.

Richard Donnell, director of research at Hometrack, said: "Over 2005 we have seen the lowest growth in house prices for over a decade. Despite signs of improving demand over the autumn, buyers are still price sensitive and we expect values to rise by just 1 per cent in 2006."

Average house prices rose in only three counties and six cities over the past 12 months. Estate agents reported that in most areas, prices either remained flat or registered small price falls.

Central London and the City led the way with a 1.8 per cent increase in prices to an average of £420,600 in December from a year ago.

Mr Donnell said: "The under-performance in London house prices over recent years has led to a steady re-alignment of incomes and house prices. The areas adjacent to the key employment centres of the City and Canary Wharf are now registering price rises, although the outer London boroughs are still feeling the impact of the re-alignment process and small price falls are still occurring in some areas."

In West Yorkshire the average house price was up 0.4 per cent to £111,000. In Derbyshire prices increased by 0.1 per cent to £125,800.

For the cities, Derby came top with a 1.3 per cent annual increase, followed by Bradford, Leeds, Hull and Newport. Of the 54 cities covered by the survey, 48 saw small price falls over the past year.

Agents in Milton Keynes reported the largest decline, of 7.2 per cent, reflecting weakening demand and rising housing supply.

At the bottom end of the scale, the survey of agents showed that Leicestershire has been the worst performing county this year, with prices down 3.6 per cent. Leicester was the third worst performing city, showing a decline of 5.3 per cent. Following high house price inflation in Leicestershire over the past five years, the declines probably represent a stronger than average re-adjustment to more affordable levels, Hometrack said.