THE prospect of war with Iraq has led to the first recorded fall in house prices for more than two years - but the North is yet to feel the pinch.

A survey for the three months up to February by The Royal Institution of Chartered Surveyors (RICS) revealed that house prices in London and the South-East had fallen at the fastest pace for almost a decade.

But in the North-East, the market was still buoyant at the beginning of the year with the "ripple effect" of price drops in the South yet to have an impact on the North.

RICS spokesman Ian Perry said that the imminent war had led to an increasing number of homebuyers adopting a wait-and-see approach.

But chartered surveyors in the North-East were optimistic about the market.

Edward Watson, of Edward Watson Associates in Newcastle, said: "We have experienced a very busy February - far better than 2002."

Peter Heron, of Peter Heron Estate Agents, in Sunderland said the market in their area was rampant with instructions being received at a "particularly high level."