Property prices rose by 0.6% in June, compared with a 1.5% rise the previous month.

The increase means prices have risen by 21.9% over the past year, with the average house price standing at �130,312.

While the housing market has cooled, the Halifax said it was still growing at a faster pace than expected and as a result had raised its forecast for house price growth this year from 9% to 10%.

Earlier this week, the Nationwide building society's survey found prices rose 0.9% in June giving an annual growth rate of 19.2%.

Regional differences

"House price growth has slowed during the first half of this year compared to the exceptionally strong performance in 2002, and we expect this to continue over the coming months," said Martin Ellis, chief economist at Halifax.

REGIONAL ANNUAL PRICE CHANGES North - 36.4% Yorkshire & the Humber - 33% Wales - 29.6% West Midlands - 28.6% East Midlands - 26.8% North West - 25.8% South West - 20% East Anglia - 18.3% Scotland - 17.3% South East - 14.7% Greater London - 11.5% Source: Halifax (UK average 21.9%)

One reason for the slowing market was that more properties were coming on to the market, the Halifax said.

However, demand for housing is expected to remain strong because of low unemployment and low interest rates.

The survey also confirmed the recent north/south divide in the housing market, with prices rising most strongly outside London and the South East of England.

The biggest house price rises over the past three months have been seen in the North of England (8%), Yorkshire and the Humber (6.8%) and the West Midlands (5.5%).

Meanwhile prices in greater London have slipped by 0.9% over the past quarter and by 1% in the South East.

The North (36.5%) and Yorkshire and the Humber (33%) have also seen the biggest rises over the past year, while London (11.5%) has fallen to the bottom of the table.

Equity withdrawal rises

Separate figures released on Friday showed that home owners are still increasing the amount of money they are prepared to borrow against the value of their home.

The increasing indebtedness of consumers is raising the risk of a correction in consumer spending further down the line John Butler, HSBC

Data from the Bank of England showed that a record �13.5bn of equity was withdrawn in this way during the first three months of this year.

This compares with �8.05bn borrowed in the same period last year, and the previous quarter's figure of �12.66bn.

The combination of surging house prices and low interest rates has led many people to use equity withdrawal as a way of raising money.

Simon Rubinsohn, economist at fund manager Gerrard's, is predicting mortgage equity withdrawal will reach �50bn this year, up from about �40bn in 2002.

"This will play a key role in helping to sustain consumer spending at a time when household disposable incomes are being squeezed," he said.

But other analysts noted the danger of letting homeowners over-extend themselves.

"The increasing indebtedness of consumers is raising the risk of a correction in consumer spending further down the line," said HSBC economist John Butler.