While the property boom cools off down south, prices in the North-East continue to rise, making it the hottest place to invest.speculators are forcing North-East house prices through the roof.

Homes in Darlington have shown the second sharpest rise in the country over the last year and local estate agents believe the increase is down to investors pumping money into the market.

Average prices shot up more than 34 per cent between October and December 2002 and the same period last year, with sales of terraced houses in the town showing the sharpest increase - up 44 per cent.

According to the figures released by the Land Registry, house prices in Darlington have risen by £26,704. Interstingly the sharpest increases have been among the lower end of the market. The cheapest terraced houses have soared by a massive £21,118.

Local estate agent, Andrew Potter of JW Wood, explained that while the property market in the South East may be cooling off, house prices in Darlington are showing no signs of slowing down.

"Every day we are being surprised by the properties and the prices they are achieving," he said.

"The interesting thing has been the meteoric rise of the terraced house. They have risen more sharply than any other type of property, thanks primarily to the investor market.

"There has been a huge amount of investment money coming into the market here, because these people have money which isn't making them anything in the bank.

"People have been concerned about pensions and stock market related investments so they're investing in property.

"We have people coming here from all over to buy properties because they are cheaper, but they are a good investment."

According to the figures, the slowest increase in property prices in the region was York, where average prices rose by just seven per cent. However, John Wroot, sales manager at William Browns estate agents in the city, disagreed with this figure.

"It really depends which price bracket you look at. In the top price bracket; the £250,000 properties and above, prices do seem to have levelled out, but the terraced house; the two-up, two-down, is still doing well.

"We are absolutely desperate for properties to sell. Recently we had 11 people look at a terraced house on the day it went on the market and five of them put in offers well over the asking price, so there's no sign that side of the market is slowing down at all."

While the property boom is ripping the heart out of rural communities in the Yorkshire Dales and the Vale of York, where houses are being bought as holiday homes, forcing prices sky high and out of reach for local people, elsewhere the boom is seeing rundown areas regenerated.

In Spennymoor, where thousands of job losses at Black and Decker and Thorn could have reduced the place to a ghost town, the property boom has helped regenerate the area.

Where buyers are being priced out of the market in Durham, they are turning to the nearby terraced houses in Spennymoor to set up home, making it a good place to live and commute from.

Julie Forbes, branch manager of Halifax, Spennymoor, said: "Now more people own the terraced houses, they take better care of the homes and community and the areas are on the up, which in turn increases the value of their homes."