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Housing boom may outlast stamp duty holiday, says Bank chief

The Bank of England’s deputy governor says it’s possible that the current housing market boom may continue even after the end of the stamp duty holiday in the autumn.

Jon Cunliffe, in an address to the Law Society, says structural shifts in the wake of the pandemic, such as greater home working, may keep demand elevated.

He says that while“one would expect the market to cool down when public support to the economy in general and the housing market in particular is withdrawn” it is possible that there “may also be some reasons to believe that the recent increase in demand for housing, and perhaps the composition of that demand, which has driven the UK market in recent months reflects some more persistent drivers and that the market will not fall back to its pre-pandemic decade performance when the tax incentives have gone.”

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Earlier this month a series of house price indices and forecasts have put house price inflation at approaching 10 per cent.

And Cunliffe adds that an estimated 19 per cent of renters can afford to save enough to afford a mortgage even at 95 per cent loan to value.

If the sales boom continues further or accelerates, he warns that the Bank’s Financial Policy Committee have to step in - a guarded suggestion that could indicate interest rate rises.

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