IMF warns of UK housing market threat

The IMF has warned that the UK's unbalanced housing market could threaten future economic growth.

It said the UK economy is on track generally, but expressed concerns about rising house prices and the housing shortage.

It also said that the Government should abandon stamp duty in favour of a levy on property value.

The IMF said there was clearly need for more housing in the UK.

It expressed concerns about the amount of high-LTV lending and said the Bank of England might need to impose tougher checks on mortgage lending if it remains at current levels.

IMF managing director Christine Lagarde said: ‘House prices are still growing faster and higher than income grows.

"In addition, while household debt has stabilised, it has stabilised at fairly high levels. That leaves small households vulnerable to income and interest rate shocks.”

The IMF’s assessment on the UK economy was largely positive, praising strong recent economic performance and progress in addressing underlying vulnerabilities.

The UK has slowed lately but still beat most major world economies over the past couple of years, and the IMF predicted average long-term growth of around 2% a year.

It warned that high levels of UK debt also threaten the economy. Other concerns included uncertainty over the ‘Brexit’ referendum and the "strikingly large" UK current account deficit.