House prices are rising faster in the North East than anywhere else in the UK, according to a new report.

The North East Home Truths 2008 report, from the National Housing Federation and researched by Oxford Economics, has found that a boom in the region's housing market has seen house prices leap by 161 per cent since 1997, while salaries have risen only 35 per cent in the same period.

Although the North East has had the fastest increase in house prices in the past five years, the report predicts a fall in house prices through to 2011. Prices will then rise rapidly creating further supply and demand problems.

Looking ahead, the report says the average house price in the region in 2013 will be £163,600, which is a 15 per cent rise from 2007.

In Berwick house prices were 13 times more than incomes, however, despite this no new social homes have been funded there for 2008/09.

The National Housing Federation, which represents the regions housing associations, says the report shows that despite some calls to the contrary it is critical that the Government continues to invest in new social housing

The federation believes the effects of the credit crunch could hit the delivery of affordable housing and that the Government needs to work with housing associations in a flexible and innovative way in order to ensure current housing targets are met.