House prices are now rising nationwide, the head of the Bank of England has said. Meanwhile, economists are divided as to whether – and how – an overheating housing market could be damped down.
A new poll by Reuters suggests that the Bank of England might not be able to restrain a housing market bubble.
The poll, of 22 economists, shows prices are predicted to rise 5.7% next year, after a 6.5% increase this year – an increase since Reuters’ poll in August.
In the latest poll, half of respondents expressed doubt about the Bank of England's ability to restrain the market.
Eight economists said they were not very confident in the Bank’s ability to control a rampant market, while nine said they were fairly confident. Only one is very confident.
One of the participants, Azad Zangana, economist at Schroders, said: "A fundamental lack of supply in housing is driving up prices, and the only sustainable solution to this crisis is to build more homes."
Another, Peter Dixon, economist at Commerzbank, said: "The surge in prices reflects a genuine supply-demand imbalance."
A third, Philip Lachowycz at Fathom Financial Consulting,said: "The problem is not confined to London. Property prices are high relative to incomes across all regions in the UK and are being inflated further.”
BoE Governor Mark Carney has so far stressed that housing transactions are still almost a third below pre-crisis levels, and that the central bank has other tools at its disposal to avoid having to raise interest rates to tame house price rises in one part of the country.
However, yesterday (Tuesday) Carney told Parliament that price rises in London and the south east are broadening into the rest of the country.
Yesterday evening, Jeremy Duncombe, of Legal & General, said:"The comments from Mark Carney today on the lack of housing supply are in line with what we have been talking about for some time.
“This lack of supply in the UK housing market is making it harder for young people to get on the housing ladder and is also pushing up house prices.
“The Government’s Help to Buy scheme has done a lot to increase confidence in the housing market and it will help some people realise their dream of buying their own home.
“However there is more to be done to ensure that the recovery of the housing market is sustainable such as building more homes and greater innovation in mortgage products.”
See also next story.
Comments
"Even if house prices outside London are not getting the feel good factor that's no reason to start bolstering them up using 'Help to Buy' etc. It's the 'marketing of each property' that needs improving - not better financial marketing."
Did I ever say there WAS a need for "better financial marketing"? No.
That being said, I also do not believe that there is a requirement, as you suggest, for improvement in "the marketing of each property".
I think you'll find that there are hundreds of thousands of individual nails hammered into that particular coffin YEAR ON YEAR, Sir...
@ PeeBee
Even if house prices outside London are not getting the feel good factor that's no reason to start bolstering them up using 'Help to Buy' etc. It's the 'marketing of each property' that needs improving - not better financial marketing.
I think quite happily on my own WITHOUT your intervention, Mr RR.
"The Land Registry has now made available all of its historic price paid data"
ALL?? REALLY??
Poor bu99ers - I'm sure that if they ask nicely ANY Estate Agent with doors open pre-1995 will help them out with "pre-historic" data to allow them EVEN MORE information sharing...
But... of course... you simply cut and paste something that you THINK is of interest. You THINK that it is going to make us prick up our ears and wait for the next thrilling instalment of the RR Comedy of Errors.
Truth is - you're boring now. Your schemes are old news - we've moved on to bigger and better things, I'm afraid.
'ONLINE' and 'HYBRID' Agents vs. Traditional model - now that's the topic of interest these days - check out THOSE threads.
Think about THAT.
Well It's a free world Wardy, except that by what you do (and do not do) you are affecting others - not always in a good way though.
I'm not biting RR.
I'm not one bit interested in your new formula for selling houses.
For the record I've been using land reg in my work for the last 12 years, as have most agents.
Not exactly Mr current affairs are you?
Well now I've got you two thinking :P
BTW, I'm not continually glued to my PC, so I don't always reply instantaneously. True realisations about what is needed to improve the way that houses are sold (and bought) can take a little longer.
The result would be more business, for all.
The Land Registry has now made available all of its historic price paid data.
What use do you guys think this might have and how might you use it in your work?
wardy
I knew you knew. Thing is whether HE knew you knew - which I don't know.
Now that he knows you knew; and that I knew you knew - and that he might even have a smidgen of an inkling that you knew I knew you knew...
...you just know what will happen next - don't you? ;o)
And he knows too.
Seeing as 'They said there's no bubble...' has cut and pasted this post at least twice... here's MY cut'n'pasted response to him:
"WOW!!!
Yet ANOTHER pseudonym from the immortal Mr RR!!
Welcome back, Sir - I've missed your ankles! ;o)
ps - NO... YOU DON'T!"
;o)
I know, I was humoring him.
Childish really, I should crack on with some work.
wardy...
SAME p!ll0ck, I'm afraid.
"Ding, ding - round 443", methinks.
Wonder if he stays the full three minutes or climbs out of the ring like usual the second the punches start flying in at him...
;o)
They said there's no bubble ...
''Can anyone guess who is writing this too?''
No but you remind me of another pillock on here that for some reason thinks that agents have some sort of power over the market, politics, the bank of england and people in general.
Your going to have to try better than that if you want an invite to the estate agency Illuminati.
Only last month the so-called 'think tank' people were claiming there is no house-price bubble and that any hysteria on this matter is wholly misplaced!
What do the Osbournites say about it now???
Something clearly needs to be done, but what precisely?
(By the way, I know!)
Does anyone in the agency sector want to help resolve the problem yet?
Can anyone guess who is writing this too?
The London population has risen dramatically in the last few years The elephant in the room is the number of arrivals to our shores who come here for nefarious reasons. The London Evening Standard reported a little while ago that 10,000 Somalian couples came to London from the Netherlands as soon as the Dutch authorities decided to clamp down on FGM, a horror which the UK will not tackle. Others come here to evade terrorism charges in other countries. The security services recently spoke of circa 3,000 active jihadists in the UK. The list goes on. These people all live somewhere and say if 50,000 homes were to be made vacant, that would impact dramatically on the housing shortage in the South East.
"A fundamental lack of supply in housing is driving up prices, and the only sustainable solution to this crisis is to build more homes."
NO! making cheap credit more easily available is pushing up prices. I am pretty sure that if HTB had not been implemented house prices would not have risen
Prices will only reduce if supply outstrips demand or credit is less available / too expensive.
So other than this, a sensible policy would be massive investment in building social homes homes for the poorest and not one bedroom exec flats i am talking family homes. This would reduce demand in the private rented sector and reduce prices. This will never happen with at least 25% of current government having BTL portfolios!
"This lack of supply in the UK housing market is making it harder for young people to get on the housing ladder"
As well as affordability If supply was the only issue you would all be selling 100% of your stock.
This does nothing to increase supply, we do not have enough new starts to satisfy anywhere near curent or future demand, unless they find away of sorting that the yo yo effect is here for a while.
The help to buy scheme has not be effective in getting developers to increase build rates.
"I hope the BoE doesnt do its usual trick of hiking interest rates up as that hurts everyone- apart from savers?"
And apart from people who have a pension scheme and apart from people who buy imported items such as fuel...
As a small business owner and mortgagee of a mid size 4 bed detached nr good schools in North West I can attest that house pries here are not rising that much.
I am stuck not being able to relocate or sell. Not even going to try right now.
Cant prove my income, for various reasons, cant get a loan or a mortgage even though we can pay what we are paying now and have equity in our property.
I hope the BoE doesnt do its usual trick of hiking interest rates up as that hurts everyone- apart from savers- what are savings again?
The answer is glaringly obvious, get banks and building societies to lend more- not just to 1st timers and relax their stupid rules brought on by the US stupid policies.
Second: get builders to build more starter homes as thats whats missing.
With low property prices even a 2-up- 2- down is £70k here.
With average wages less than 20k how is a young couple expected to get on the ladder and save the massive deposits rqd.
Are we seeing as in other countries ie parts of Canada and Germany an end to majority house ownership and the beginning of life time of renting with only a few owning houses and some larger firms owning 1000's of houses?
It sounds like a return to Victorian Britain to me.
"A new poll by Reuters suggests that the Bank of England might not be able to restrain a housing market bubble."
No surprise given that the BoE hasn't even begun to explain what they consider constitutes a bubble. From what little they have communicated, it seems that bubbles are all about transaction levels now, rather than prices.
Bit of a worry Mr Carney saying property prices are now rising nationwide. It does not generate much confidence in his abilities long term for the British economy.
Having spoken to agents from most regions of the UK over the past fortnight, apart from specific towns and cities there is little evidence yet of price increases in most of the provinces. Outside South Wales prices have been falling in the principality, as they have been in parts of northern England. (Scotland doesn't matter, they won't be with us for much longer!). Let's be very careful about this Londoncentric reporting; one would have hoped the chief of the Bank of England could see through it.
What a crazy situation. Its easy to cock the market up. They'd simply rise interest rates. Sorry should that have been easy to cap.
But we don't want to. If 'experts' leave as is the sales trend will continue. Estate agency is always fragile as night comes earlier.
The poor market meant people couldnt move without drastic drops. Now if equity gains those moving down will release funds into the economy = employment and sale of goods and equity in peoples hands rather than banks saying no to investment.
BofE would be wise to do little over the next 3-6 months and review after.
Too many specialists do too much harm. We need higher interest rates. But not just yet.
Many home owners are still stuck with negative equity or no growth.....that is why we are seeing a shortage. As soon as they can afford to sell they will move and we will see another dip in prices. We are in for an undulating time of ups and downs over the next few years until all the stock which owners cannot afford to sell at present moves out the system. However this will lead to a withdrawal of properties in the lettings market which is another discussion.
I work within the building industry and agree that where this is a demand the price will rise as with all products. New building is being squeezed by planning laws, massive paperwork and related fees for planning applications, costly code level requirements, costly and sometimes impractical renewable energy requirements, inconsistent planning officer's views, and building costs. Land prices have not fallen, in fact risen due to lack of land on which to build. If people want their children to have their own houses they have to stop complaining about building on the edges of green belt to release building land.