People are swapping London lofts to set up nest in Newcastle

The report, from influential think-tank Demos, says the desirable place for professional people to live is no longer London, but Newcastle and Gateshead.

Creative industries on Tyneside have said they are recruiting more people from outside the North-East attracted to the area because of an improved quality of life, affordable houses and - what it calls - "the cultural buzz".

New developments like the Sage Music Centre, the Millennium "blinking eye" Bridge, and contemporary arts centre Baltic, have symbolised the cultural changes.

The report findings are consistent with figures from the Office for National Statistics which suggested 2002 was the first year in a decade during which more people moved into the region than left.

Too many of our towns have identikit streets with the same retail and pub chains which can kill the soul of the place Anna Minton, report author

Anna Minton, the author of the report titled Northern Soul, says 54% of the public relations, advertising and media production companies questioned are seeing what is called a "brain gain".

Ms Minton said: "There seems to be brain gain from the south-east as a growing number of professionals and creative people are attracted by the cultural buzz of Newcastle and Gateshead.

"Students who would normally have come to university on Tyneside and then moved south and graduating are also choosing to stay in the area.

"Newcastle and Gateshead have managed to change and grow without losing what I call their 'soul' - the sense of identity and character which makes a place distinctively different.

"Too many of our towns have identikit streets with the same retail and pub chains which can kill the soul of the place."

However, the report did warn that Tyneside could still fall into the trap of 'buzz to bland' if the creativity and character of the area is lost in the commercial development rush of urban regeneration.