House prices look dangerously overvalued, having soared to record levels in relation to both incomes and rents.

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And despite historically low interest rates, household debt service is now at record levels in relation to income.

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In America, Britain and several other economies, mortgage debts have soared to record levels in relation to household income.

ECONOMIST: House prices

Average home prices rose by 19% last year, pushing prices to record levels in relation to both average incomes and rents.

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Yet in America and Britain, among other countries, house prices are already close to record levels in relation to average incomes.

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However, the Bank has somewhat reduced its medium-term forecast for consumer spending growth and says that it could turn out to be even lower because household debt has reached a record level in relation to income.

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In real terms house prices in America, Britain and Australia have risen more rapidly in recent years than during the late 1980s house-price boom, leaving prices close to record highs in relation to both rents and household incomes.

ECONOMIST: Economics focus

Our reason for suspecting that a house-price bubble has developed in the six countries listed in the first paragraph is that in all of them house prices are close to record levels in relation to both rents and average incomes.

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