The UK's biggest estate agency company has, for the second time in two months, warned of the property market slowdown, raising fears of an unruly end to the property boom.

Countrywide, which owns chains including Bairstow Eves, John D Wood and Mann & Co, said that a downturn highlighted by a 25 per cent slump in property deals in July was becoming entrenched.

"In our interim statement we noted the market had become cooler but that it was premature to say whether this would continue," Countrywide said.

"The cooler market did continue throughout August and appears to be persisting into September."

The number of deals in the pipeline at its 900 offices was 20 per cent lower at the end of last month than a year before.

The warning came as Countryside Properties, the urban development specialist, also warned of "weakened" housing markets, with the decline blamed on the five increases in interest rates since November. A slowdown long noted in the South East and in more expensive properties, had spread to the other sectors of the market.

"Potential purchasers are taking longer to commit themselves and are increasingly seeking to negotiate harder terms before proceeding to purchase," Countryside, predicting a drop in annual profits, said.

Yesterday, the International Monetary Fund cautioned that in countries where house prices have risen most, there was "a danger that higher interest rates could trigger a much larger downward adjustment in house prices". The rate of growth in UK house prices has, since 1997, been second only to Ireland's among industrialised nations.

The Bank of England also revealed yesterday that it decided two weeks ago not to raise borrowing costs further in part because of a fears of a "more abrupt correction in house price inflation".

However, many leading economists, lenders and housebuilders are forecasting a mild market slowdown. Barratt Developments yesterday forecast house price growth falling to about 4 per cent, in line with salary rises.

Countrywide said that the fall in deals would exacerbate a slowdown at its financial services business, which was already struggling as cash-strapped homebuyers scrimped on extras such as life insurance.

"The results for the year will be below current market expectations," the company said.

Countrywide shares stood 30p lower at 292p in afternoon trade after hitting 274p earlier.

Countryside Properties stock stood down 24.5p, or 9.0 per cent, at 249p.

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