THE Bank of England has forecast a sharp slowdown in the housing market during the next two years.

However, experts had mixed feelings about the warning, suggesting it may be a new attempt to slow down runaway house prices.

To date, a series of small, incremental rises in interest rates by the bank have had little, if any, effect on consumer's appetite for bigger mortgages and credit card debt.

Warnings about the housing market and the spectre of a price slump are a more extreme reality check.

Geoff Graham, director at JW Wood estate agents in Durham City, said: "The has certainly been rumblings that the Government, through the Bank of England, is trying to put the dampers on things."

But he said demand for property in the region was strong.

"We are absolutely bombed out at the moment, the volumes are there. The market has become a little more price sensitive, that said, prices are continuing to move up and there is a lot of activity.

"We have sold more houses so far this month than we did in the entire month last May."

Predictions of a slowdown came in the Bank of England's quarterly inflation report.

It said that prices may well continue to rise strongly in the near term, underpinning strong growth in consumer spending.

But spending will ease as growth in disposal income moderates and house price inflation slows.

Economic growth is expected to pick up to well above trend in the near term, sustained by continued buoyancy in household and government spending and the revival in business investment.

But the rate of expansion is predicted to drop back as consumer and public spending growth moderate.

Bank of England governor Mervyn King said a synchronised economic recovery around the world seemed to be well under way.

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