HOUSE prices in part of the North-East are increasing faster than the national average.

A survey by property research company Hometrack shows that prices on Teesside rose by three per cent in June, compared to a national average of two per cent.

The rise outstripped the rate of increase in London and the Home Counties.

While actual house prices on Teesside remain among the lowest in the UK, the rate of rise was only fractionally beaten into second place by Cornwall.

The survey also indicates that the boom shows no signs of abating with property prices nationally expected to have soared by 20 per cent by the end of this year.

Average prices have risen by 9.8 per cent so far and are expected to continue to increase in 2003, albeit at a slower rate of 8 per cent.

John Wrigglesworth, housing economist at Hometrack, said: ''I am not expecting it to slow this year, it's gone up ten per cent so far and we are expecting it to go up another ten per cent."

Last week, the Council of Mortgage Lenders made an unprecedented call for an increase in interest rates to take some of the heat out of the market.

But the indications last night were that the Bank of England was expected to announce later this week that rates would be frozen for the eighth month in a row.

Senior economists believe rates will not begin to rise until August.

City economist David Page said it "would take a fundamental hiccup in global recovery for rates not to have increased by September.''

Tees Valley Partnership chairman Alistair Arkley said of the new survey: "I think it would be from pretty low average house prices in pound note terms compared to other areas but it probably does show that people are beginning to realise that throughout the Tees Valley there are some very nice areas to live.

"And getting around is a lot easier than perhaps in the south.

"In terms of value for money, it is a very good place to live but I would like to see this sustained over a time frame.

"One swallow does not make a summer, but it is heading in the right direction.''

Stockton South Labour MP Dari Taylor said: "If we are seeing a higher demand for housing stock then a genuine sense of quality of life is beginning to get through to people.''

But she said she was concerned in case living costs and wage packets were unable to keep pace with the rise in house prices.

The MP said: "All the time we are building up pride in our community but what we don't want to do is price people out of the community.''