HOUSE prices rose by 2.1 per cent during July, despite growing evidence that the market is slowing, government figures have shown.

The strongest gains continued to be seen in northern regions, with the North-East seeing the most growth in England, running at an annual rate of 29.5 per cent.

The Office of the Deputy Prime Minister (ODPM) said the average house in the UK now costs £177,474 - 14.3 per cent more than a year ago.

The rise, which follows the previous month's 1.8 per cent, failed to reflect the slowdown in the housing market reported by estate agents and chartered surveyors.

However, Nationwide Building Society reported an increase of 2.1 per cent during July, while Halifax said prices rose by 1.2 per cent.

Both lenders have since said price growth slowed sharply last month, with Nationwide saying increases stalled to 0.1 per cent, while Halifax reported a 0.6 per cent fall in the price of property - the first fall for two years and the sharpest since December 2000.

Unlike the Nationwide and Halifax house price indices, which are based on mortgage approvals, the ODPM figures are based on prices at completion, and as a result, are unlikely to reflect a market slowdown until September.

The ODPM said prices rose for all types of property during July, with the cost of a detached house increasing by 3.2 per cent, while a semi-detached property cost 2.4 per cent more and a terraced house rising by 2.3 per cent.

But growth slowed in Yorkshire and the Humber and Scotland and also remained more subdued in southern regions, at an annual rate of 9.1 per cent in the East, 8.2 per cent in the South-East, and 8.4 per cent in London, down from 11.8 per cent for the year to the end of June.

Despite the slowdown in annual price growth, London still remains the most expensive place to buy a house, with property there averaging £266,277, followed by £231,913 in the South-East.

Property is cheapest in Northern Ireland, where the average house costs £110,541, and then Scotland, at £113,398.

The average price paid by a first-time buyer is £143,270, 17.6 per cent more than a year ago after prices for people taking their first step on to the property ladder rose by 2.6 per cent during July. This was well down on last July's jump of 5.4 per cent.

Existing owner occupiers are now paying an average of £196,008 for a property, an increase of 13 per cent since July last year.