IMF: Britain could have housing meltdown

London -- Britain risks a housing price slump similar to that in the United States, as a credit crunch taxes an overvalued market, the International Monetary Fund said.

In its semiannual review of the global economy, the IMF cautioned Wednesday the British housing market was more over-priced than the United States market was before its recent decline, The Guardian reported.

"Housing markets have boomed in a number of fast-growing countries, most notably Ireland, Spain and (the United Kingdom), with rapid price rises and sharp increases in residential investment relative to GDP exceeding even those observed during the (U.S.) housing boom," the IMF, based in Washington, said in its World Economic Outlook report.

Some increase in house prices was justified by changes in economic basics such as lower interest rates, an increase in the number of single-person households and rising incomes, the IMF said. However, the panel said the model it used showed U.S. house prices rose by a third more than fundamental economic changes considered, and that over-valuation in Britain was more pronounced.

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