THE UK's biggest mortgage lender last night doubled its forecast for house price rises before the end of the year, but said it still expected the market to slow.

Halifax is predicting property prices will be 16 per cent higher by the end of the year than they were at the start - compared with the eight per cent rise it expected at the beginning of the year.

It said the market remained particularly strong in the North, with price rises outside the South accounting for about 70 per cent of the 11 per cent increase in the cost of property seen so far this year.

However, it said there were signs that the market in the North was beginning to cool because increasing numbers of first-time buyers in the region now faced similar difficulties to those in the South.

It said it expected prices in the region to rise by a total of 27 per cent this year, with gains of 25 per cent in Yorkshire.

Halifax said that high levels of employment and historically low interest rates had boosted demand for property, which, combined with a shortage of homes for sale, had led to big price rises.

But it said it expected the market to slow during the second half of the year as the cumulative effect of four interest rate rises began to bite and first-time buyers faced increasing problems getting on the property ladder.

It said the number of mortgages approved for house purchases slowed during April, while recent surveys from estate agents reported a fall in inquiries from buyers and a reduction in the number of sales agreed.

Halifax expects the Bank of England to increase base rates to five per cent by the end of the year.