House prices in Oxford may have stopped rising -- and in some areas actually started falling -- but one area of the city is still a "hot spot."

Competition is so fierce for luxury homes in parts of north Oxford that prospective buyers need to be 'in the know' to secure a property, claims one estate agent.

Homefinding service The Buying Solution, which is part of Knight Frank, estimates that for every quality property there are more than ten potential buyers.

The company claims most of these properties do not even come on to the open market and can only be bought by people who have an 'inside track of knowledge' with the key selling agents.

It says prices in Oxford have more than doubled in the last ten years, because parents want to be within walking distance of schools such as the Dragon School, Oxford High School and Wychwood School.

This is despite the fact that the National Association of Estate Agents (NAEA) this week reported that average house prices in the UK fell 1.1 per cent over the last month, completing six months of falling prices.

The annual house price inflation rate is now down to 4.8 per cent, the lowest annual increase seen this year as the slowdown in house prices continues.

The Buying Solution claims the best detached houses in north Oxford fetch £3m, with prices in Walton Manor, west of Woodstock Road, at £1.25-£1.5m.

Partner William Harries said: "Buyers need detailed knowledge of the area as there are specific roads which are much more desirable than others, due to traffic congestion or road noise. I currently know at least three exquisite houses within central north Oxford, which are unlikely to be offered openly for sale.

"It's in highly competitive markets such as this that a buying agent becomes essential."

Latest figures from the Land Registry show just three detached houses changed hands in the OX2 6 postcode area from July to September at an average £1.09m. In the previous quarter, no detached houses changed hands. From January to March six were sold for an average £1.25m.

House prices will drop nationally by up to 3 per cent over the first few months of 2005 before stability returns to the property market, analysts said yesterday.

Property website Hometrack predicted that buyers would wait until summer before being tempted back into the market, leading to fewer house sales next year.