THE North-East remains the cheapest place in England to buy a home - but house prices are rising more rapidly in the region than anywhere else.

The English region with the lowest average house price in December was in the North-East, at £128,991, and the highest in London at £257,195, Government figures showed.

But the highest increase in prices remains in the North-East, where prices are rising by 20.5 per cent a year, followed closely by Yorkshire and the Humber, at 18.8 per cent.

Despite this, house prices fell by 0.7 per cent across the country in December.

The market is cooling most quickly in areas where people are finding it hardest to afford a house, with prices in London up three per cent compared with 10.7 per cent nationally.

Prices for detached houses fell by 1.3 per cent, terraced houses by 0.6 per cent and flats by 0.8 per cent. The average house price was £178,906 at the end of last year, down from £180,126 the previous month.

Sabina Kalyan, property economist at Capital Economics, said the figures contradicted the picture of housing market strength given by the Halifax index, which showed house prices rose by 1.4 per cent in December.