Average property prices rose again in May, but by only 0.6% on the month, driven by a 1.2% rise in London, according to Hometrack, who now put the average house price at £164,500.

Richard Donnell research director at Hometrack said: "The London effect has been flattering the overall picture of a relatively buoyant housing market. The reality is that house price growth remains limited across large parts of the country.

"The prospects for the second half of the year are not so good", he said. Donnelll forecasts growth of just 3% for the whole of 2006. "The growing divide between London and the rest of the country means that it is dangerous to read too much into the headline rate of growth."