The International Monetary Fund warned on Wednesday that the housing boom in a number of countries has taken prices to levels that cannot be justified by economic fundamentals and that a market correction poses a significant risk to global growth.

The fund singled out the UK, Australia, Ireland and Spain as countries in particular danger. Increases of more than 50 per cent in a number of countries since 1997 (see chart) could not be explained by fundamentals such as low interest rates. Indicators, including ratios of house prices to incomes and housing rents, have hit records, the IMF warned in a chapter released from its forthcoming World Economic Outlook.