The International Monetary Fund has predicted a crash in the UK housing market after decades of price increases that have outstripped other economies.
The IMF's world economic review warns of a fall in prices in response to interest rate rises but the National Association of Estate Agents has attacked its analysis as incorrect and “needlessly scaring homeowners”.
The IMF claims a crash is inevitable as UK house prices have risen faster since 1997 than in any industrialised country except Ireland.
The report says in countries where prices have risen significantly there is “a danger that higher interest rates could trigger a much bigger downward adjustment in house prices, with considerably more severe consequences for real economic activity.”
NAEA chief executive Peter Bolton believes if rates go up at all in November it will only be by 0.25 per cent and this would the peak. He concedes there is a slowdown in the market and its monthly housing report shows the average property price for August was down by 1.25 per cent from July.
Nearly 80 per cent of estate agents believe that house prices have reached their highest point and will now decline.
The Council of Mortgage Lenders says gross mortgage lending slowed to £25bn in August, 13 per cent lower than July's £28.9bn.
NAEA chief executive Peter Bolton King says: “Incomes in this country rise by 4.5 per cent a year on average. If house prices remain pretty static over four years, then house prices will come back in line with incomes and we believe this will happen.”