Estate agency group Countrywide provided further evidence of a cooling in the housing market as it warned its annual results would be below current expectations.

The profits warning came as the International Monetary Fund (IMF) said that rising interest rates could trigger a house price crash in the UK.

It said that as the cost of borrowing increased, price growth would slow down significantly, and it warned that a fall in house prices could not be ruled out.

In its World Economic Outlook Report, the group said that since the mid-1990s, many industrial countries had experienced a house price boom which was unusual in both its strength and duration, and was accompanied by record-high levels of mortgage debt.

Meanwhile, Countrywide, which has nearly 900 UK offices, including the Bairstow Eves and Mann and Company chains, said the cooler market had persisted through last month and seemed to be continuing into this month.

It said the number of transactions in progress was 20 per cent lower than last year.

The UK has seen one of the steepest rises in house prices since 1997, with only Ireland seeing stronger growth.

Harry Hill, managing director of Countrywide, said although the group was taking firm action to reduce its costs, it believed results for the year would be below current market expectations.

The Bank of England has increased interest rates five times since last November in an attempt to cool consumer spending and soaring house prices.

Wednesday's minutes from the monthly meeting of its monetary policy committee showed that signs of a cooling housing market had influenced its decision to keep rates unchanged at 4.75 per cent this month.