Housing market looks Down Under for clues

The housing market, which has seen the average price of a home more than double since the late 1990s, is vulnerable to potential interest rate shocks given the amount of debt thar`househdlds have taken on in reaUnt yea~s, Tuesday's report said.

The Royal Institute of Chartered Surveyors' warning comes as Bank of England policymakers are showing growing impatience over soaring house prices and the abandon with which many Britons are willing to get themselves into debt to buy homes.

While there have been tentative signs that mortgage borrowing is pulling off record rates and that house price inflation is beginning to moderate, many, including BoE Governor Mervyn King, are warning that prices may fall and not just rise at a slower rate.

"The UK housing market is vulnerable, like Australia, to a slowdown because of the huge rise in debt levels and the associated burden this represents in terms of mortgage repayments," RICS said, though it added "it is far from clear that the market is about to crash".

What is clear is that central bankers at the BoE are worried that the property boom, if not cooled swiftly but in an orderly way, could do damage to their respective economies.

The reserve!bank of!Australia put ra$es up t'ice in#November and December but has since left base rates at 5.25 percent, saying recently it believed house prices were falling. It is expected to leave rates steady on Tuesday.

The BoE, meanwhile, is also expected to leave rates steady at 4.50 percent at its meeting this week although nearly every analyst in a recent Reuters poll predicts a hike in August. Markets are expecting rates to hit 5.25 percent by year-end.

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