Will there be a house price crash in the UK at any point in the future?
Answers:
Wait and see
Danny Gabay, UK economist at JP Morgan bank, said Mr King was setting out "the risk that many UK economists most fear, but few have dared spell out.
"[This is] that the housing market poses the greatest danger to the UK's medium-term stability."
On Wednesday, the minutes from the Bank of England's latest interest rate-setting meeting showed that worries over the surging property market had led it to keep rates on hold at its last meeting - despite pressure from other quarters for a cut.
The minutes said a rate cut could fuel house price rises and borrowing even further "increasing the risk of a sharper fall in consumption at some point in the future".
"This is a committee that is moving away from cutting rates," said John Butler, UK economist at HSBC Markets.
"Quite simply, there appears to be a growing feeling amongst some on the [Bank's] MPC [monetary policy committee] that they may have over-stimulated the housing market and that now there is little the committee can do but wait-and-see."
Severe strain
UK house prices have soared for the past five years, fuelled by a shortage of properties for sale and low borrowing costs.
The increase in prices has helped to prop up spending by homeowners, and has also pushed up mortgage lending to record levels.
Economists fear that a sudden increase in interest rates or unemployment could put severe strain on the finances of homeowners and borrowers alike, cutting consumer spending and endangering economic growth.
Cutting interest rates would encourage more mortgage borrowing, further fuelling house price inflation.
Slowdown coming?
Mr King's speech coincided with publication of a report by the Royal Institution of Chartered Surveyors that showed British house prices are still growing at an average of about 20% a year.
And lending figures from the British Bankers' Association (BBA) showed that mortgage lending continued to charge ahead last month.
The BBA said mortgage lending surged by £5.6bn in October, the biggest monthly rise since records began.
But there was a hint that the housing market could be slowing from another house price survey released on Wednesday.
The property website Rightmove said house prices slipped by 0.2% in October, the first drop since the start of the year.
Rightmove said London was leading the decline, and falls in the most expensive areas were now spreading to other areas of the capital.
It said average house prices were now at 6.19 times the level of earnings, an "unprecedented" figure, which was only possible because of low interest rates.
Outlook uncertain
Mr King said he did not know what the outcome for house prices would be, but stressed that "changes in asset prices can have a major impact on levels of spending".
Mr King's remarks echo his warning last week that house price inflation posed a significant threat to the UK economy.
Speaking on that occasion as a member of the rate-setting monetary policy committee, Mr King said the risk of an abrupt slowdown in house prices was greater the longer the property market boom continued.
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