STRONG growth in the region's housing market has helped narrow the North-South price divide.

A study by the Halifax found prices in the South are only £83,000 higher than in the region, a fall of 16 per cent from a peak of £99,000 two years ago.

Britain's biggest mortgage lender said the region's housing market appeared to be stabilising, after house prices fell slightly last month.

Prices dropped by 0.6 per cent last month, compared with a national average increase of 0.5 per cent.

The annual rate of house price inflation continued to slow, falling to just below ten per cent for the first time since November 2001.

The strongest price gains in the first three months of the year were in Scotland, Northern Ireland and Wales, with Scotland's average house price breaking through the £100,000 barrier for the first time.

The average national house price is £163,714, little changed from January and only £1,000 higher than in September last year.

Philip Shaw, economist at Investec, said: "Since last summer, we are seeing a correction in the market, without house prices falling on a UK-wide basis."

Halifax chief economist Martin Ellis said: "The picture on a month-to-month basis remains mixed, with four rises and four falls in the past eight months.

"Overall, however, there has been virtually no change in UK house prices since last September.

"The ongoing good health of the UK economy and the associated strength of the labour market, together with historically low interest rates and a shortage of housing supply, however, appear to be limiting the extent of the downturn.

"There are increasing signs that activity levels are now stabilising and house prices are broadly static at a national level."