Evidence that higher interest rates are taking their toll on the property market were revealed last night.

The rate of house price inflation slipped in June to 0.9 per cent from last month's seasonally adjusted figure of 1.7 per cent, according to the Nationwide Building Society.

Prices grew by 19.1 per cent in the year to June, compared with 19.5 per cent in the year to May, and the average house price now costs £151,524 against £149,020 - more than double the price at start of the new millennium.

Earlier this month, statistics from the Office of the Deputy Prime Minister showed house prices were still soaring across the North-East.

The data suggested the housing boom would continue for some time in the region, despite a slowdown in the South.

The Nationwide said the areas seeing prices rise fast were predominantly in the North-East - including Hart-lepool, Gateshead and Sedgefield, County Durham.

Price growth was slowest in some of the more expensive areas of the country, including Winchester, in Hampshire, Epsom, in Surrey, and Windsor and Maidenhead, in Berkshire.

Nationwide said its forecast for house price inflation in the 12 months to December this year remained at 15 per cent, given higher interest rates, worsening affordability, reduced buy-to-let demand and a downgrading of buyers' expectations of future price growth.

However, the building society said it believed a repeat of the late 1980s slump in prices was unlikely.

And it said recent comments by Bank of England Governor Mervyn King that house prices were likely to be above their sustainable level, could knock confidence.

Group economist Alex Bannister said: "Although rising rates are likely to act as a brake on the market, we do not forsee economic triggers arising that might cause widespread and sustained price falls."