HOUSE prices in The North of England were virtually stagnant in 2006, new figures from property website Hometrack have revealed.The region saw price increases of 0.5% this year, just behind the East Midlands, which saw a rise of 0.7%.

The figures prove a stark contrast to London, where robust levels of demand and an ongoing shortage of housing for sale pushed up prices by 12% in 2006.

Overall Hometrack are predicting house prices to rise by 4% in 2007 with the strongest growth again seen in London and the South East.

Mr Donnell said: "Continued demand from existing households combined with a lack of housing for sale could result in further upward pressure on house prices in the early part of 2007.

"In the absence of any external shocks to knock market sentiment, the demand for housing in 2007 will continue to be influenced by short term expectations over interest rates and the prospects for future house price growth."

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