THE North-South divide is expected to narrow in the property market next year, according to the latest predictions.

One survey, by Housetrack, shows that prices in the North-East will remain buoyant, while the market in the South-East stagnates.

Properties above £500,000, the point at which stamp duty rises from three to four per cent, are expected to be the hardest hit.

The cooling down in the market, which started in central and south-west London, has now spread to the most expensive districts of Berkshire and Surrey.

But counties with low property prices are still experiencing a boom, with prices rising the fastest in County Durham and North Yorkshire.

The average sales price in the best performing counties is £128,000, less than half the average for the 20 worst performers.

The findings have been backed by a team of academics who run the Sussex company Technical Forecasts linked to Aston University.

Applying a more mathematical approach to the housing market, they have taken 125 different pieces of economic data to find that in London and the South-East house prices will fall by five per cent.

Values will continue to increase in the North-East, but the rise will not be as steep as in previous years.

However, some pockets will buck the trend, with prices rising as much as 13 to 16 per cent in Berwick, in Northumberland, and York.

Hometrack's predictions are slightly more pessimistic than those of the Halifax and Nationwide, but still far more positive than those from economists outside the housing sector. Those economist have been predicting a full-scale crash in the second half of 2003