Is there, or is there not, a boom in UK house prices? And if there is, does it pose any danger for the UK economy generally?

Ask any first-time buyer in the Greater London area and the answer to both questions is an unqualified yes.

And for good reason too. Data from surveys conducted by two of the UK's biggest mortgage providers suggest that house prices nationally rose by about 15 per cent in 1999, while inflation hovered at just over 2 per cent. However, not everyone agrees that house prices are booming.

FPD Savills, the property consultancy, has compiled data suggesting that house price rises are currently in line with long-term trends.

While there are certainly property "hot spots", according to Yolande Barnes, director of research, there are cold spots too. In the round, she says, there is little evidence of a house price boom.

Looked at from 1973, inflation-adjusted UK house prices have risen by little more than 20 per cent, a rate that suggests real growth of no more than 1 per cent per annum.

Even Greater London, Ms Barnes says, has not shown house price growth spectacularly above the national average when looked at over 25 years. However, Danny Gabay, economist at JP Morgan, the investment bank, says there is indeed a house price boom and monetary policy makers should be worried.

The long-term picture of house prices, he argues, is irrelevant. What matters is what is happening now, and by all accounts house prices in real terms rose roughly 13 percentage points higher than inflation last year. What is worse, he says, is that they threaten to rise even faster this year.

"Last year was about the strongest in the last 10 years," Mr Gabay says. Moreover, house price depreciation is one of the components of the retail prices index.

The 16 per cent rise in house prices since the beginning of last year will add 0.5 percentage points to inflation as measured by the RPI.

Mr Gabay dismisses the argument that house prices do not matter. They matter because they affect consumers' propensity to spend, he says.

Some two-thirds of UK households are homeowners, and of these, homes account for about 75 per cent of household wealth.

When house prices rise sharply, they give consumers the confidence to spend more, even if interest rates are rising.

Consumers have the ability to translate greater wealth into greater spending through equity withdrawal - the practice of borrowing against the increase in home equity values.

Mr Gabay notes that after falling between 1992 and 1998, equity withdrawal surged last year by more than £9 billion sterling. This surge, he notes, is coincident with the sharp rise in home values since then.

Home equity withdrawal was also behind the consumer boom in the late 1980s, a boom only halted with very sharp rises in interest rates that saw mortgage rates double in only a few months.

Mr Gabay says past trends suggest that interest rate increases must be very steep to have an impact on house prices.

The four rises in interest rates and the increase in stamp duty so far this year have made little impact on house prices, he notes.

Indeed, Savills' data suggest that interest rates alone do not correlate with house price rises, but rather that consumer confidence is a more important factor.

Even more worrying are signs pointing to decreasing reliance on mortgages to finance house purchases. Significantly, both FPD Savills and JP Morgan cite data showing that mortgages, as a percentage of disposable income, have fallen sharply in Britain over the past decade.

As a result, house buying demand is likely to be even more resilient to interest rate rises than ever before.

Such trends must pose concerns for monetary policy makers. Are there fiscal alternatives that could be used to curb house prices?

An alternative might be to tinker with bank reserve requirements, making it very expensive for lenders to extend home equity loans.

It might not cure the house price spiral but it would curb its inflationary effects.

Another option might be to tinker with the tax system. Let us say, for instance, that capital gains tax is incurred on home sales. Sellers would then have less money to reinvest in alternative housing.

Although politically unpalatable, it is hard to imagine that the move would be ineffective.