House prices are set to rise by a staggering 20 per cent this year, according to the latest predictions.

Despite growing concern that the housing market is overheating and the threat of higher interest rates, a survey published on Monday by Hometrack.

The data showed prices had risen by two per cent in June and nearly 10 per cent so far this year.

The group predicted that a slowdown would begin to feed into the market next year but until then prices would rise by a further eight per cent.

John Wriglesworth, the housing economist at Hometrack, said: "I am not expecting it to slow this year - it's gone up 10 per cent so far and we are expecting it to go up another 10 per cent."

Building societies are today expected to renew pressure on the Bank of England over interest rates ahead of the monetary policy committee's monthly meeting to decide on borrowing costs later this week.

They claim that the low level of interest rates, coupled with low unemployment, is fuelling the boom.

Nationwide has ditched its forecast that the boom would tail-off at the end of this year and is predicting double figure increases.

Bridget Rosewell, a director of the Britannia building society and chief economic adviser to the British Retail Consortium, says the market is not dangerously overheated.

"House prices are still rising, but this is not because consumers have gone off their heads," she writes. Most of the rises can be attributed to a simple phenomenon: lowered interest rate expectations," she said.

"Nearly all the house price rises we have seen are a permanent shift, and the rates of increase will soon be able to slow down with no effort by the monetary policy committee."