HOUSE prices in Burnley saw the biggest increase in the county last year.

But the rise was not enough to stop the borough propping up house price leagues with some of the cheapest homes in the UK.

Estate agents have now warned that first-time buyers could soon be priced out of the market if the increase continues.

The average price of a house in the borough went up by 50 per cent between 2002 and 2003 from £37,046 to £55,731, according to new figures from HM Land Registry.

Two years ago Burnley boasted the dubious distinction of having the lowest property prices in England and Wales with houses in the Daneshouse ward swapping hands for an average of £12,659.

The lowest prices are now to be found in Blanaeu, Gwent, although Burnley still has the second lowest figure. Hyndburn is fourth lowest on an average of £58,740.

Prices in Pendle have risen from £49,036 in 2002 to £70,585, a rise of 44 per cent. In Rossendale the increase is one of 20 per cent from £72,545 to £87,252.

Blackburn has seen an increase of almost 16 per cent from £62,135 to £71,825.

In contrast to the more urban areas of East Lancashire, the Ribble Valley boasts some of the highest prices in the North West with an average house price last year of £158,738.

Nigel Harris, partner for Burnley-based Harris and Moss estate agents, said there was still many properties in the borough suitable for first-time buyers. He added: "If house prices keep on rising eventually they will out-price themselves, but there are still a lot of properties in Burnley suitable for first-time buyers.

"If you take into account all the properties in the borough, I can see why prices remain low as there is a lot of terraced houses. But when you start looking at semi-detached and detected properties the prices for these are not low and are higher than similar properties in other parts of the region."

Morgan Halleron, the residential sales manager at Petty & Co, in Manchester Road, Burnley, said: "I think the reason the increase appears high is because of the terrace end of the market. A lot of people are coming into the area and buying up some of this market and it is pushing the prices up.

"In the past there was little or no demand and a huge supply of these houses."

The head of community engagement and cohesion at Burnley Council, Mike Waite, who is part of the team working on the borough's housing renewal programme Elevate, said: "The fact that Burnley has been successful in becoming part of Elevate and that investment has been expected may well have contributed to the positive moves there have been in terms of stabilising and boosting housing prices.

"One of the characteristics of Burnley's housing market has always been that it is very uneven. In some areas we have seen population decline, neighbourhood abandonment and property values slumping, which is still happening. People are in negative equity.

"But in other areas, where affordable housing for families is built as part of a new development, you can't sell them fast enough.

"So the average house prices given in these figures do not get into the variety, complexity and unevenness that is part of the problem we are trying to address through the Elevate programme."