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The International Monetary Fund contradicts the OECD's pessimistic view that property prices in Europe are overvalued by up to 50% in some countries. The IMF offers a new, more comprehensive reading of the current market.

Even though the IMF points to an overvaluation of around 3.6% in the UK, Greece and Belgium, the institution headed by Christine Lagarde believes that the forecasts of the OECD and "The Economist", which are based on the relationship between prices, rents and disposable income, do not take account of the fall in interest rates on property loans, household disposable income and reduced debt.

The current situation does not suggest that a property bubble could burst. This risk arises when individuals acquire property at above-market prices by taking on more debt than they can afford, particularly with variable-rate loans. In this case, the mortgage bursts when the borrower is no longer able to meet the loan repayments and the sale price of the foreclosed property is not enough to pay off the creditor.

For the IMF, the risk of a property bubble can therefore be ruled out.

The European Central Bank's monetary policy means that banks can offer home loans at very low rates. This favourable situation should boost property transactions, without leading to an increase in property prices, according to the International Monetary Fund.

What's more, banks are seeing an increase in applications for home loans, and are even prepared to lower their margins.