'It's got to turn': Greenspan says the party's over in Britain

One of the biggest names in world finance has said the UK property market is heading for a fall.

Alan Greenspan, former chairman of the US Federal Reserve, warned in a 'Daily Telegraph' interview of "difficulties" for British housing, perhaps along the lines of those being experienced across the Atlantic. In the US, property prices have been falling sharply for months as mortgage borrowers struggle to keep up with their repayments.

He said the UK was particularly vulnerable to the crisis gripping world money markets because a high proportion of home loans were on a variable rate.

Mr Greenspan, 81, said: "You're already beginning to see the mortgage rates moving. A lot of the two-year fixes are beginning to unwind and the teaser rates are going. It's going to turn – it's got to turn."

However, he did have some encouraging words for the UK economy. He praised its openness and said it was well placed to ride out any global economic downturn.

Mr Greenspan was once lauded as the giant economic figure of his age, but in the light of the problems in the US, that reputation has come under fire. Critics claim he allowed consumer debt and house price inflation to get out of hand, and that Americans are now counting the cost.