House prices almost 1/3 over sustainable level - NIESR

According to the Institute's latest economic review, properties in the UK are at the moment about 30% overvalued. With this in mind, the main risk to economic growth over the coming years is a decline in house prices, the Niesr says. If prices fall, they could end up knocking up to 25 basis points off annual GDP growth between 2005 and 2008, the Niesr review warns. To soften the blow, the Bank of England should raise interest rates from 4.5% to 5% when it meets next week, say the NIESR as this would slow down inflation. The independent research institute believes the Bank's mone...