HOUSE prices in York fell slightly last year - even though prices in Yorkshire and the Humber are rising faster than anywhere in England.

A survey shows the average cost of a house in the region went up by 5.3 per cent in 2005 - but in York it fell by 1.3 per cent.

Estate agents in the city say the figure may be due to a mixed picture in York and North Yorkshire's housing market.

But they remain positive about sales in the city, and predict rises of between two and five per cent in 2006.

Edward Waterson, of Carter Jonas, said: "In the last year, certain properties have gone up in value, particularly those for which there is a greater demand. Generally, these are country properties which account for rises in North Yorkshire.

"The York figure of 1.3 per cent down shows the market in the city is fairly stable - you are only talking about £100 on the price of a house.

"This may be due to slower flat sales which means the average price of what is being sold is lower, which is different to a drop in prices.

"Perhaps where some prices were being stretched in 2004, we saw a more realistic approach in 2005 - but I would expect to see a rise in line with inflation over the next year."

But Reuben Barrett, managing director of Otisdale, predicted prices would rise by up to five per cent in 2006.

He said: "York is an increasingly sought-after city for those moving from London and the south and we are experiencing a growth in buyers from these areas registering through our internet marketing service.

"The one area likely to continue to struggle is new-build flats, where over-supply has kept prices under pressure and rents low."

Keith Hollinrake, director of Hunters estate agents, said: "The price rises across Yorkshire reflect the positive employment prospects in Leeds, with 31,000 jobs being created over the next three years.

"York will see the benefit of that as a main commuter area for people wanting to live in the countryside but work in the city.

"We are entering a period of prolonged stable growth in house prices, with rises of about five per cent per annum for a prolonged period of time, which can only benefit people in the area."

The average price of a property in York is still far higher than the rest of the region, standing at £187,893, compared to £158,581 elsewhere in Yorkshire and Humberside.

Fionnuala Earley, group economist at the Nationwide Building Society, which carried out the house price survey, said: "House price inflation in Yorkshire and Humberside has outstripped the UK rate since mid-2002, reaching its peak of 35.3 per cent in late 2002.

"Since then, price inflation has cooled and moved closer to the UK average.

"But it still has the highest house price inflation rate in the UK, behind Northern Ireland and Scotland."

Updated: 09:27 Thursday, January 12, 2006