THE housing market is about to experience a "year for the North", according to a senior economist.

Price growth is slowing in the South, while the North is continuing to enjoy healthy improvements in prices, said Martin Ellis, chief economist at the Halifax.

Britain's biggest mortgage lender said the entire country had experienced strong house price growth continued during March with the cost of property rising by 1.1 per cent.

Low interest rates and unemployment continued to drive the market.

But the rise was down on the previous month's jump of 1.8 per cent and January's increase of 1.5 per cent, suggesting the market was gradually slowing.

Mr Ellis said: "We are expecting it to slow down and we have been seeing that happen gradually over the past few months."

The group said that while property remained affordable in terms of mortgage payments, borrowers were constrained in the amount they could borrow by their income, and this was hitting first-time buyers.

Mr Ellis said: "We expect the difficulties that first-time buyers face in entering the market, particularly in the South of England, to increasingly curb demand and cause house price inflation to moderate gradually during the rest of 2003.

"There will, however, be a marked North-South divide, with the market slowing to a much greater extent in the South.

"In contrast, conditions across northern Britain are set to remain buoyant, making this the year of the north."

The increase puts annual house price inflation at 23.4 per cent, while the average home now costs £127,040.