Recent interest rate rises are leading to a ‘cooling’ of the UK’s mainstream residential market outside of the southeast, according to a trading statement by property agent Savills.

But prime markets like London continue to be buoyant, while ‘super prime’ or luxury markets have continued to rise strongly, the London-based agency said.

Savills' (SVS) comments, contained in a first-half trading update for the six months ended 30 June, came the day before the Bank of England is expected to raise interest rates a further quarter of a point to 5.75%. It would be the fifth since last August.

Savills’ trading statement also coincided with the release on Wednesday of Halifax’s monthly housing figures, which suggested the rise in housing prices in the UK is slowing.

UK house prices grew 0.4% in June, the second successive monthly rise of less than 0.5%, the bank said.

Overall house prices in the second quarter of the year increased by 2%, less than the 3% increase recorded in the first quarter and well below the 4.25% rise in the fourth quarter of 2006.

In its trading statement, Savills noted that the new homes markets in certain of the UK’s ‘provincial’ cities are starting to show signs of over supply, while markets in London and the southeast remain strong.

‘In the residential market, luxury apartments and townhouses have been appreciating strongly while more lacklustre growth has been experienced in the mainstream market,’ Savills said.