THE region's housing market looks set to remain buoyant for 2003 despite growing reports of a slowdown in the South, according to a leading mortgage lender.

Peter Rowley, chief executive of Darlington Building Society, said talk of a market price realignment - where house prices which have risen rapidly start to fall - was generally unfounded.

The announcement came as the society unveiled strong growth on the back of record lending in the past year.

Mr Rowley said: "The housing market will not collapse.

"With interest rates at the lowest since 1955 and employment generally buoyant, the affordability of housing is at its most constant.

"Buying property continues to be the best form of investment, particularly in the North-East, where house prices are not as volatile as in the rest of the country."

The DBS, traditionally one of the most asset-liquid financial institutions in the country, claimed a successful period of trading during which it continued to push its case as a local institution looking after the interests of local people.

The efforts saw total assets up seven per cent at more than £503m and members' share balances up the same amount to £402m.

Gross advances were up 45 per cent to £106m and net mortgage lending increased nine per cent to £393m.

The DBS used its position as a mutual - which means it is not duty bound to provide dividends for shareholders - to dip into its reserves to keep a competitive edge in the mortgage lending rates.

In spite of this, pre-tax profit was £2.3m and, after tax, £1.7m was added to reserves which stand at £35m.

The society plans to make further strides in the estate agent market in 2003 after its Deal division improved instruction numbers and sales completions compared with 2001.

The development subsidiary Darlington Homes also benefited from activity in its home town as well as Sunderland and Morpeth in Northumberland.

Mr Rowley pointed to the society's perseverance with providing staffed branches as a key to future success.

He said: "Our commitment to maintaining a comprehensive branch network ensures that the quality of service for which we are regarded highly will be maintained at a time when other institutions continue to restructure their networks, close outlets and render the customer experience inferior."