National house prices rose by only 0.4 per cent in June, according to Halifax, Britain's largest mortgage lender, as the latest evidence emerged of a market slowdown — and a widening rift between nationwide property prices.

In Greater London prices rose by 4.9 per cent last month, the lender said, with Northern Ireland roaring ahead with an increase of 8.5 per cent for June.

Northern Ireland is now the most expensive part of the UK in which to buy property outside London and the South East, the Halifax said.

According to today's figures, however, surging prices in these economically more prosperous areas are masking real declines in less-well-off areas.

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Last month prices fell 0.4 per cent in the South West of England, slid 1.1 per cent in the West Midlands and dropped 2.8 per cent in Wales, Halifax figures showed.

Martin Ellis, Halifax chief economist, said: "These figures indicate that house price inflation is slowing.

"The increases in mortgage rates and the persistence of negative real earnings growth in the early months of 2007 are expected to cause annual house price inflation to slow further over the coming months."

Halifax maintained today that the fundamentals of the property market were still strong and in the past 12 months have risen 10.7 per cent to put the average house cost at £197,461.

Today's figures come after Halifax said last month that house prices rose 0.3 per cent in May.

This means that house prices have risen by less than 0.5 per cent for two successive months and suggests that a series of interest rate rises since August have begun to bite on consumer sentiment.

The Bank of England meets today ahead of a decision on interest rates tomorrow that is predicted by many economists to result in a further quarter-point increase, to 5.75 per cent, in the cost of borrowing.

Howard Archer, chief UK and European economist at Global Insight, noted that house price rises for June were "markedly" below increases seen in the first four months of 2007 of up to 1.9 per cent.

"Overall, the evidence suggests to us that the housing market has peaked and is gradually coming off the boil," he said.

Hometrack, the property data company, reported this week that property prices grew only 0.3 per cent in June.

It asserted that prices were rising in only 28 per cent of the country.

It suggested that the annual rate of house price growth would drop to 4 per cent over the coming months and that London prices would falter.

Nationwide, the building society, is predicting that prices will grow by between 5 per cent and 8 per cent this year.

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