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The average house price is set to rise another 26% in the five years to 2018, although growth may slow slightly from next year.

A new report from estate agency Savills predicts average property price growth of 9.5% in 2014.

It then predicts prices will rise another 4% next year, by 3.5% in both 2016 and 2017, and 3% in 2018.

This will add up to 25.7% over the five-year period.

But London will struggle to keep up recent strong momentum, Savills said, which should see the capital's property market rise 15% this year, against an original prediction of 8.5%.

It expects London property values to be flat in 2016, then rise at a slower pace than anywhere else in the country in 2017 and 2018.

Demand is weakening as sentiment changes and property owners move out of the capital.

Lucian Cook, Savills UK head of residential research, said: "House price growth in the mainstream market has been underpinned by record low interest rates, rising loan-to-income lending and pent up demand from buyers re-entering the market as the economy and consumer sentiment have improved.

"But these extraordinary rates of house price growth cannot continue in the current, more regulated mortgage environment, particularly in the face of likely interest rate rises."

Savills' forecasts assume average mortgage interest rates will reach 5% by the end of 2018, a level that would leave room for further price growth.

"Higher interest rates would increase the risks in sectors of the market where borrowers have taken on high levels of mortgage debt relative to income, but it is difficult to see this as a catalyst for a wholesale housing market correction, rather we anticipate a slowing of growth, particularly in London and the South."

New data from the British Banking Association shows that the number of new mortgages fell to 42,800 last month against 43,200 in June, although volumes are up 12% on last year.

This unexpected fall followed the new Bank of England cap on the number of high loan-to-value mortgages, introduced at the end of June.

Gross mortgage borrowing of £10 billion was 16% higher than in July last year, reflecting the surge in house prices over the last 12 months.

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