Speaking at a Barclays conference in New York, the bank’s chief executive Antony Jenkins said Britain runs the risk of a property boom as the economy starts to recover.
‘We are seeing probably a more buoyant housing market for the first time in perhaps as much as a decade,’ Jenkins said, according to Bloomberg. ‘That’s a bit concerning because there is the risk of a property-driven boom in the UK. The regulators are on it and don’t intend to let it happen, but these things can be difficult to control.’
Hit hard during the recession, the UK housing market has recently received a boost from government measures including the Help to Buy scheme, which helps buyers unable to afford a large deposit to get on to the property ladder.
Britain’s wider economic recovery has also improved consumer confidence in the UK housing market. House prices surged to the highest in almost seven years in August, the Royal Institution of Chartered Surveyors said yesterday.
Also adding weight to the recovery of Britain’s property industry is the performance of housebuilder Barratt, which unveiled a 74% rise in pre-tax profits to £192.3m in the year to June. The company cited improving confidence and better lending conditions as a result of initiatives such as the Bank of England’s Funding for Lending scheme, which aims to increase mortgage lending to households.
Echoing Jenkins’ comments, business secretary Vince Cable warned that a ‘new housing bubble’ could be around the corner due to the upturn in lending. The government has made it easier for buyers with only a 5% deposit to buy a new-build property worth up to £600,000, and the scheme will be extended to any home in January 2014.
‘We should certainly think about how it should come into effect, indeed whether it should come into effect in the light of changing market conditions…We don't want a new housing bubble,’ he told Sky News.
Cable, of course, made his name predicting the first property crash in 2008, so he has form in this area. Is he right to be cautious second-time round?