Housebuilders Bovis Homes and Redrow have said growth in the housing market is slowing as a result of the Bank of England's recent interest rate rises.
Trading statements released by the two firms said the market was levelling out after its 20% growth in the past year.

The Bovis statement said: "The housing market over the past two months has shown signs of moderation to a more normal level of activity. The recent increases in interest rates have dampened the level of price improvements to one that is more sustainable."

Redrow said it expected its operating margin for the six months to 30 June of 19.5% to eventually ease back to about 17%. The firm said this "represented a sustainable level in normal market conditions".

The firm also warned that comparing this summer with last would lead to exaggerated claims of a slowdown, as last year's spring sales were delayed by the Iraq war.

Paul Pedley, Redrow's chief executive, last month welcomed the speech given by Mervyn King, governor of the Bank of England, who warned that recent house price rises could lead to a sharp correction in the market. He described it as "incredibly responsible".

Further evidence that the market is stabilising has been provided by the RICS, which has compared the UK housing market with Australia, where prices have risen 60% in the past three years.

The RICS said that the Australian market had experienced a soft landing in early 2004 after the steep price rise. The research said of the UK market: "Even with higher mortgage rates, the housing market is still unlikely to experience prolonged price falls unless the economy also falls into recession."

  • The housing market in Ireland is set to continue its boom, according to QS Davis Langdon PKS. The firm said it expected 76,000 housing units to be built this year. It added that it expected the country's construction sector to grow by 3.5% this year.