Ron Kennor of Robinson & Jackson Partnerships, looks at the house price bubble and wonders when – or indeed, if – it will burst.

THE average price of a house in the UK is now about £200,000 which is over seven times the national average wage of £28,210. This means Mr Average first-time buyer, borrowing the customary three and a half times his salary and putting down a 10 per cent deposit, can barely afford to pay £100,000 which won’t buy anything in most areas. So how – and why – does he keep buying?

Ten years ago the same house would have cost about £62,000, a rise in value which, if projected forward 10 years, would mean the local suburban semis currently selling for up to £300,000 will be changing hands for around a million pounds.

But of course "prices simply can’t continue to rise", which is what the economists have been saying for at least the last five years.

The market continues to prove them wrong.

If you are the lucky owner of the average house bought in 1996 then your home has risen in value £1,150 every month you have lived there.

These useless statistics demonstrate that the economics of house prices defy common sense and prices simply must stop rising.

The change in our financial culture is that we have all forgotten the edict of "neither a lender nor a borrower be" and, up to now at least, it has been highly worthwhile to borrow as much as possible simply to put a roof over your head.

With fewer houses being built, apparently to preserve this green and pleasant land for those who already have a nice home, demand for housing has continued to outstrip supply and forced up prices.

However, this phenomenon is not unique to our land-starved property market as the whole of the developed world has experienced a "property bubble" as described by the Americans and Australians.

And have you noticed that all the countries visited by those buying abroad TV programmes are all described as ‘property hotspots’?

If there is a property bubble it seems to be worldwide and the figures dwarf any other economic activity,

But at the end of the day the major world economies still depend on oil.

The Americans are currently wincing at paying (for them ) the horrific price of over three dollars a gallon for petrol which is having a knock-on effect on personal finances and slowing the property market which is also affected by higher interest rates.

Those of us who were around in 1974 when the oil price quadrupled, inflation was re-invented and the housing market stalled will not be surprised to see that war in the Middle East is one of the few things that can hold back property prices, or at worst burst the bubble, worldwide.

*Ron Kennor is general manager of Robinson and Jackson Estate Agents. He can be contacted 020 8850 7788.