This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at http://www.theguardian.com/money/2014/jul/15/ons-uk-house-prices-may-london
The article has changed 4 times. There is an RSS feed of changes available.
| Version 0 | Version 1 |
|---|---|
| Bank of England governor warns of a bubble as UK house prices rise 10.5% | |
| (35 minutes later) | |
| The Bank of England's governor has issued a fresh warning on the threat of a UK property bubble, as official figures showed house prices rose by 10.5% in the year to May. | |
| Mark Carney told MPs on the Treasury select committee that rising house prices and high levels of mortgage debt taken on by households remained the "biggest risk" to economic recovery over the medium term. | |
| Outlining in detail why the Bank's financial policy committee made the decision last month to limit the proportion of high loan to income mortgages granted by lenders, he said that a proliferation of highly indebted households could tip the economy back into recession. | |
| Carney said that as house prices rise, individuals become increasingly financially over stretched in order to afford to buy a house, prompting them to reduce spending on other things. | |
| "What we were trying to address was the indirect risk from indebtedness ... and the macroeconomic consequences of that. Because history shows British people pay their mortgages, there are very low default rates on mortgages. What happens if households are borrowing at high multiples is they have to economise on everything else in order to pay their mortgages. | |
| "And if enough people are highly indebted, that has a big macroeconomic impact. It can tilt the economy back into recession, and we start from a position of vulnerability. There is the possibility that currently responsible lending standards become irresponsible to reckless." | |
| Carney said the FPC had decided to prevent lenders from extending more than 15% of their mortgages to customers needing to borrow four-and-a-half times their income as an "insurance" policy against a dangerous rise in high loan to income mortgages. | |
| His comments were made as figures from the Office for National Statistics (ONS) showed the average house price paid by first-time buyers has pushed through the £200,000 mark for the first time. | |
| The data, which is based on figures from mortgage lenders, showed prices increased strongly across the regions, although London continued to outstrip the rest of country with a record annual increase of 20.1%. | |
| The average price of a property in the capital is now £492,000 – just £8,000 short of the 4% stamp duty threshold. | The average price of a property in the capital is now £492,000 – just £8,000 short of the 4% stamp duty threshold. |
| Across the UK the annual rate of inflation was the highest for four years and up from the 9.9% recorded in April. | Across the UK the annual rate of inflation was the highest for four years and up from the 9.9% recorded in April. |
| However, once price increases in London and the south-east are stripped out, the ONS said the annual increase across the UK was 6.5% in May. The average cost of a UK home reached £262,000, or £200,000. | However, once price increases in London and the south-east are stripped out, the ONS said the annual increase across the UK was 6.5% in May. The average cost of a UK home reached £262,000, or £200,000. |
| Prices have risen more quickly for first-time buyers than for those moving home, going up by 11.3% over the year to an average of £202,000. Owner-occupiers saw inflation of 10.1% over the same period and paid an average of £301,000 to move. | Prices have risen more quickly for first-time buyers than for those moving home, going up by 11.3% over the year to an average of £202,000. Owner-occupiers saw inflation of 10.1% over the same period and paid an average of £301,000 to move. |
| Duncan Stott, director of PricedOut, the campaign for affordable house prices, said: "It is crazy that ordinary working people are having to pay so much for something as fundamental in life as a home. With over £200,000 needed to secure a first home, young people will now be saying 'enough is enough'. | Duncan Stott, director of PricedOut, the campaign for affordable house prices, said: "It is crazy that ordinary working people are having to pay so much for something as fundamental in life as a home. With over £200,000 needed to secure a first home, young people will now be saying 'enough is enough'. |
| "The housing market is the biggest threat to economic stability, so it is simply reckless of the government to allow house prices to rampage so far out of reach. We need urgent action to bring an end to rising house prices." | "The housing market is the biggest threat to economic stability, so it is simply reckless of the government to allow house prices to rampage so far out of reach. We need urgent action to bring an end to rising house prices." |
| The ONS figures showed that during the year to May average house prices increased by 11.0% in England, 6.5% in Wales and 3.6% in Scotland but fell 0.7% in Northern Ireland. | The ONS figures showed that during the year to May average house prices increased by 11.0% in England, 6.5% in Wales and 3.6% in Scotland but fell 0.7% in Northern Ireland. |
| Campbell Robb, chief executive of he housing charity Shelter, said house prices were "spinning out of control". | Campbell Robb, chief executive of he housing charity Shelter, said house prices were "spinning out of control". |
| "With interest rates at historic lows, it is worrying that taking on huge mortgages is becoming a tempting option, and something that could have disastrous repercussions," he said. | "With interest rates at historic lows, it is worrying that taking on huge mortgages is becoming a tempting option, and something that could have disastrous repercussions," he said. |
| "The government has to start meeting people halfway by committing to building the homes that they can afford. From a new generation of part-rent part-buy homes, to encouraging smaller builders back into the market, we know that this is possible. Now we need to see action that will bring an affordable home back within reach." | "The government has to start meeting people halfway by committing to building the homes that they can afford. From a new generation of part-rent part-buy homes, to encouraging smaller builders back into the market, we know that this is possible. Now we need to see action that will bring an affordable home back within reach." |