According to property website Hometrack, activity in the residential housing market has dropped and price rises have slowed as potential buyers are put off by increasing interest rates.

Hometrack found that the number of sales of houses rose by 4.3% in May, which was down from a 9.6% increase in April, while the number of new buyers registering with agents did not change.

House prices rose by 0.6% in May, taking the annual pace of inflation among properties surveyed by Hometrack to 6.7%, slightly down from 6.8% in April. A housing slowdown has been widely forecast after the Bank of England raised rates four times since August 2006. A fifth rate rise is also expected soon, with some analysts forecasting that base rates could climb as high as 6% this year.

Richard Donnell, Hometrack’s director of research, said: “The steady ratcheting up of interest rates was bound to take its toll eventually. We expect the headline rate of growth to slow relatively quickly throughout the year to 4% as affordability pressures put a continued squeeze on purchasing power and more supply comes to the market.”

Hometrack reported that an increasing number of homes were coming onto the market as vendors in London and the South East sought to cash in on strong market conditions. The number of new properties was up by 6% this month, from 5.7% in April. House price growth was led by London, the South East and East Anglia, with other regions experiencing only subdued house-price rises.