IMF says UK house prices too high
The International Monetary Fund yesterday added its voice to that of The Economist and The Bank of England, pointing out that British house prices appear much higher than can be explained by developments in fundamentals (wages and rents), and warning:
The central risk remains an abrupt adjustment in the housing market… ...With interest rates on a rising trend, and most house purchases financed with adjustable rate mortgages, house buyers should exercise particular caution at the present juncture.The government, estate agents and building societies have been talking down the risk of a sudden drop in house prices, but as The Economist has pointed out previously, the first law of bubbles is that they inflate for a lot longer than anybody expects. The second law is that they eventually burst.