The property markets in the North of England and Wales would suffer “significant decline” should the Bank of England raise interest rates any time soon, according to one industry expert.

Doug Shephard, director at home.co.uk, was speaking after the release of the website’s latest Asking Price Index, which shows that the gulf between prices in the North and South of the country continued to widen last month.

According to the Index, the average asking price of a home in England and Wales is now £282,744 – up 0.4% on August’s figure and 6.5% up on this time last year.

The Index said buyer demand and short supply in London and the South of England was continuing to drive up national average prices across most areas of the country.

However, it shows a marked difference between the overall fortunes of the North and South. While prices in London are now up more than 50% over the past five years, they have actually fallen in the North-East.

The Index also shows:

• The price of a house in Greater London rose by 12.8% – or £60,000 – over the past year.
• Supply of stock continues to fall, with record lows for August, down 59% since August 2007 and 10% year-on-year.
• Rises in the South-East of England are outperforming even Greater London, growing by 6.1% in the past six months.
• The biggest national price rises were in the East of England and the South-East (0.9%).

Shephard said: “With prices in London up 53.5% and the North-East down 0.4% over the last five years, it is clear that the northern and southern property markets are poles apart.

“We maintain that, in view of such diversity of fortunes across the country, it is near impossible how the Bank of England can realistically raises interest rates any time soon.

“Property markets in the North and Wales remain very fragile and would suffer significant declines should the cost of borrowing rise, causing negative equity and devastation of mortgage lenders’ balance sheets.”

Prices in the North-East now average £153,776 – a modest rise of 0.4% on August but still down 0.2% on this time last year.

In Yorkshire & The Humber prices grew by just 0.5% month-on-month and by just 0.3% in Scotland.

In the North-West prices rose by just 0.1% month-on-month, as they did in the West Midlands. In the East Midlands they rose by 0.2%.

However, in the East of England and the South-East, prices were up 0.9%. In Greater London they rose just 0.2% and in the South-West just 0.3%.