The Halifax has calculated that over the last year house prices rose fastest in the north of England, Yorkshire and Wales, while in London and the south east the market ran out of steam.

Overall, the gap between the average UK house price (�129,443) and London (�218,404) narrowed to �89,000 from a record �95,000 in the first quarter of 2003.

The report described the past twelve months as the 'Year of the North', with house prices rising a staggering 36.4% in the North of England, 33% in Yorkshire and nearly 30% in Wales.

But, in the south and the capital, price growth barely scraped into double digits.

London's falling

In the past few months, parts of London and the South East have been experiencing price falls according to some recent market surveys.

What is more, in a complete turnaround on previous years, all top ten property price hotspots were located in the north.

Macclesfield in Cheshire recorded the biggest rise in prices 51%, followed by Grimsby 49%, Spalding 48%, Halifax 46% and Pudsey and Barnsley 45%.

"Continuing housing market buoyancy in the north over the second half of the year combined with a pause for breath in the south should close the gap further," said Halifax chief economist Martin Ellis.

However, according to the Halifax report, there continues to be a huge gap in property prices between the north and the south.

The average property price in London is 69% above the UK average.

Ten years' ago, prices in the capital were only 23% above the national average.

But the northern property market is likely to be playing catch-up for the foreseeable future according to a report from market analyst firm Datamonitor.

First-time buyers particularly in the south of England are increasingly being priced out of the market the report concludes.

In 2002, 38% of loans for house purchase were made to first time buyers compared to 48% back in 1998.