This house price boom is going to end one of two ways

While it is oversimplifying somewhat – the broad views are that we are heading for a plateau or a crash, writes Hamish McRae

The relationship between house prices and incomes has soared and is now the highest it has been in the UK for more than a century (Gareth Fuller/PA)

The house price boom races on and on. The latest twist comes from Halifax, with data showing that the average price for a home in the UK reached £272,992 in November, up some £20,000 on the past year. That is an annual growth rate of 8.2 per cent, while the quarterly change, up 3.4 per cent, is the highest since late 2006. So much for the ending of the stamp duty holiday squashing the housing market.

Where does this all end? The first thing to be clear about is that this is a global phenomenon. According to the most recent tally from estate agents Knight Frank, in the second quarter of this year prices were up 9.2 per cent worldwide, with only two countries – India and Spain – seeing declines. Knight Frank pondered whether the market might be close to its peak, given that global interest rates seemed set to rise. Since that does not yet seem to be happening, perhaps not.

So it is global, and the UK is pretty much middle of the pack. But there are some other issues. One is that a lot of money is being taken out of the market in the form of equity withdrawal. The Bank of England keeps a count of the amount of money people are putting into the housing markets, or taking out. In the run-up to the last housing crash in 2008, people were taking more out, typically by remortgaging homes to raise cash which they spent on other things. Since then they have been piling money in. But at the beginning of this year, the numbers flipped. Once again they have been taking money out.