BOOM

Here we go:

The global housing boom that has propped up the world economy in the face of falling share markets in the past few years is teetering on the edge of a crash, The Economist has concluded.

Pam Woodall, economics editor of the British weekly, said it had conducted global housing surveys and sector research over the past year.

"House prices look seriously overvalued in Australia, Ireland, the Netherlands, Spain, Britain and the US and will fall by at least 20 per cent in many economies over the next four years," Woodall told a conference organised by Investment Property Databank.

The trigger for a crash could be a relatively modest increase in interest rates as total levels of household debt were at record highs fuelled by borrowing and housing equity withdrawal on the back of historically low rates.

Woodall said it was a fallacy to assume rate rises on the scale of the late 1980s would be required to hit house prices as the major indicator for the residential market - the ratio of house prices to average income - was at record highs in the US, Australia and Britain.

The US had had the biggest rise in house prices in its history since the mid-1990s, and a sharp fall in the market in the largest global economy would tip the world into recession.

"The US has very little fiscal or monetary ammunition left to support its economy if house prices collapse," said Woodall. "If the US falls it would be the first global property bust in history."

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