HOUSE prices rose by 2.2 per cent last month, driven by continued strong demand and a shortage of homes for sale, said the Halifax.

Prices continued to rise most rapidly in northern England and Wales, with the cost of property increasing by 9.7 per cent in the North-West during the first quarter, 9.4 per cent in the North, 8.3 per cent in Wales and 8.1 per cent in Yorkshire and the Humber.

The increase lifted the average price of a home in Yorkshire and the Humber above the £100,000 mark, leaving prices below this level in only Scotland and Northern Ireland.

The rise boosted annual house price inflation to 18.5 per cent for the year to the end of March, up from 16 per cent in January, and pushed the average price of a house in the UK through the £150,000 barrier for the first time to £151,467.

Halifax said house prices had risen by 6.2 per cent this year, and an increase in the level of sales suggested the market was gaining momentum.

The news, which came the day after Bank of England figures showed homeowners withdrew a record £16.19bn in equity from their properties during the last quarter of 2003, will increase pressure on the Bank's monetary policy committee to raise interest rates when it meets next week.

Prices have soared by 36 per cent in the North during the past 12 months and by 35.6 per cent in Wales.

This helped the North/South price divide narrow by £10,000, although property in the South still costs an average of £125,981 more.