In December 2005, the Halifax predicted that prices this year would go up by just 3 per cent, now, we could be facing an increase of 13 per cent by 2007.
Many surveys have identified the lack of first-time buyers as the reason for the slowdown in prices as house prices have reached such a level that it is becoming increasingly difficult to get onto the property ladder.
Mortgage lenders are also becoming more careful about lending levels and the size of mortgages they will grant which limits the price potential house-buyers can pay.
The number of new loans approved for house purchases in March 2006 was 27 per cent higher than a year before and slightly higher than the average for the past six months.
In some areas, especially London and the South East of England, prices have been static. First-time buyers are having a particularly tough task trying to afford a property in those regions.
But in many other parts of the country such as Wales and the North, prices have become cheaper and the property market has continued to surge ahead.
While, the Halifax has said it expects the rate of growth to even out across the country house prices will still rise to more than three times the rate predicted this year, mortgage lenders have also warned.
An economics consultancy, Capital Economics, which has for several years been forecasting price falls, took the view that prices would drop in 2006 by 5 per cent. However, the average property values are expected to increase by 7 per cent.
This could mean interest rates being raised leading to more people falling behind with mortgages and having homes repossessed, the Council of Mortgage Lenders (CML) warned.
The organisation added it now expected 1.2million properties to change hands this year, up from the 970,000 it forecast previously.
It also predicts net mortgage lending will total £85billion, much more than the £75billion expected.
But the group is also revising its interest rate forecasts and now expects the cost of borrowing to end this year and next at 4.75 per cent rather than 4.5 per cent.
CML economist Jim Cunningham said, Demand will remain robust over the next few months but confidence and activity are closely associated with interest rate movements and expectations.
This would result in a modest fall in transactions, he added, indicating that prospects looked brighter for 2008.
But while interest rates remain very low at 3.5 per cent, their lowest level since 1955 – a number of analysts and market commentators have also been warning against the exaggerated debt levels the low interest rates have created.
They suggest prices can go on rising in some areas, though at much more modest levels than before.
During the first four months of this year, prices across the UK rose on average by 4.4%. If that trend continues then properties will end the year around 13% more expensive than they started. That could mean the average house price reaches nearly £195,000.