The Economist has supplied a graph which shows how far and fast house prices have risen in a range of countries.
Taking 1980 as the base with an Index of 100 (so there is available data for all these countries) produces the following list of price rises: (approx Index level in each case judged from the graph)
South Africa 3590
Hong Kong 1450
New Zealand 1370
Countries like Germany and Switzerland in the EU have seen smaller rises. In the EU Ireland and Spain have shown the greatest overall rises in the boom. Both have experienced sharp falls in recent years. Both have fallen victim to the destructive boom/bust cycle the Euro has imposed on them. Spain peaked at nearly 1700 before falling by 30%. Ireland peaked at 1151 before halving to 570. The UK was wise to stay out of this problem.
Outside the EU several Asian success story economies have experienced rapid house price rises. Hong Kong and Singapore have been particularly strong. So too have Australia and New Zealand.
Judging by these international comparisons the UK experience has been in the middle of the pack. UK house prices experienced falls in 1990-92 when the UK was locked into the boom/bust cycle caused by membership of the Exchange Rate Mechanism and exit from it. The UK also experienced sharp falls in 2008-9 when again it experienced a violent boom/bust cycle thanks to misjudged fiscal and monetary policies.
There is no evidence from international comparisons that the UK is currently in an unsustainable house price boom, nor from the domestic market in most locations. It is true that in central London in expensive areas there is substantial buying from abroad, usually for cash, which has been bidding up prices strongly for some years. The competitive jurisdictions like Hong Kong and Singapore have experienced something similar. To judge whether Central London is expensive for foreign buyers you need to compare high London prices with high prices in Hong Kong, New York, Sydney etc.
The government has this week published its details of the Housing deposit guarantee scheme. All those who have written in to condemn subsidies to the house buying market will be pleased to know that the scheme charges the lending institution a fee for the guarantee priced to avoid any state subsidy – which would be illegal under EU state aid rules anyway. This fee can and will be adjusted in future in the light of the actual bad debt rate experienced. I would not support a housing subsidy scheme where taxpayers were paying part of the bill for someone buying a property at up to £600,000.