THE report in the Telegraph warning of a timebomb in the price of houses should be treated with a good deal of caution.

It is true that the prices of houses have risen at a much higher rate than wages, but the reasons for this are exceedingly complex.

Much of the rise in prices is a monetary illusion that is a direct consequence of printing money and the creation of credit through the fractional-reserve banking system.

As Spock might have said to Captain James T Kirk: "This is wealth Jim, but not as we know it."

The basis of the prediction from the National Housing Federation is not disclosed, but appears to be little more than extrapolating recent trends into the future.

If the future were always like the past then the richest people in the world would all be librarians.

Statements from local estate agents should be immediately discounted as they depend for a living on selling houses at high prices.

Asking an agent his or her opinion on the housing market is like asking your barber whether you should have a haircut. The answer is a foregone conclusion.

I have no idea where house prices are going but I do know this.

There has never been a period of rapid asset inflation that has not been followed by a bust.

A review of the chart of property values during the last quarter of a century reveals a cycle of rises accompanied by significant declines.

Those who think property prices always go up would seem to be fully paid-up members of the it's different this time' club.

Others might prefer to read the late John Kenneth Galbraith's slim volume A short history of financial euphoria.' In it he advises: When a mood of excitement pervades a market or surrounds an investment prospect, when there is a claim of unique opportunity based on special foresight, all sensible people should circle the wagons; it is time for action.' KEVIN HEY, Castle Road, Colne.