BoE guru warns of house price crash

THE Bank of England's property expert yesterday warned there was still a chance that house prices may crash.

Kate Barker, who wrote a government-commissioned report on the housing market, said: 'There are some signs which might indicate a housing bubble - increased private buying of housing for letting with the expectation of capital gain, and parents using equity from their own homes to assist children with deposits - but it is not clear how far these may have contributed to higher prices.'

She added that it was impossible to tell how far prices could fall.

In her speech to the National Association of Business Economics Policy Conference Barker hinted that the Bank may raise rates in the coming months to keep inflation under control, saying that it was unwise to let inflation rise above its 2% target.

She said: 'Allowing the economy to run above trend to stimulate higher inflation and then slowing it in order to prevent a target overshoot seems rather unattractive.'