Prices are still going up, but not as fast as before

The Halifax said July was the fourth month in a row to show a house price increase lower than 1%, indicating that the market was slowing down.

The latest rise pushed up the annual rate of house price inflation from 10.7% to 11.2%, the bank said.

Halifax says the average UK house now costs �198,915, but prices have risen by just 1.3% in the past three months.

Halifax chief economist Martin Ellis said: "We expect the downward trend in house price growth to continue as the five interest rate rises since last summer have an increasing impact on household spending and housing demand.

"Sound economic fundamentals, high levels of employment and a shortage in the number of properties available for sale - particularly in London and the South East - will, however, continue to support house prices."

Interest rates

The continued strength of the UK housing market as set-out by the Halifax contradicts the latest Nationwide market survey.

Last week, the Nationwide said annual house price inflation was falling-back and they anticipated this trend to continue through the rest of 2007.

Five rises in UK rates since last August have been cited as the main reason for a market slowdown.