HOUSE prices in Newport have continued their upward trend with the average house now costing £72, 628.

But while the Principality Building Society places a £72,000 plus figure on the cost of a home in Newport, local estate agent Richard Crooke says it is more like £85,000 and looks set to rise even further.

Figures released by the Principality show an annual increase of 11.1 per cent for houses in Wales compared with six per cent a year ago. This is the fastest rate of growth for Welsh house prices recorded by the Principality for more than ten years.

Peter Griffiths, chief executive of the Principality Building Society, said: "Despite a sustained period of rising prices, housing still remains very affordable because mortgage rates are at their lowest level for nearly 40 years. The combination of rising prices and affordable mortgage costs has created a sustainable housing market because it boosts buyers' confidence and stimulates demand. With take-home pay rising and housing perceived as a good investment, we are currently enjoying ideal conditions for a strong market."

Mr Crooke, of Newport-based Crooke and Blight Estate Agents, said when his company undertook a recent breakdown of its sales it found the average price was way above the Principality.

He said: "We sell on average 60 houses a month. We came out with our average sale at just under £85,000."

Describing the figures as based on a good cross section of sales, Mr Crooke said: "It's very similar to the market in 1989. We have a tremendous shortage of properties and a tremendous demand from Cardiff and Bristol."

But the Principality claims upward prices are unlikely to continue indefinitely as it believes house price rises will have to slow down to a more sustainable figure, which will be closer to the rate of inflation.

The trigger for this could, the society says, come from encouraging signs of recovery in the UK economy and suggestions that the Bank of England will increase interest rates in the second half of the year.