BRITAIN’S huge shortfall of housing supply is the biggest risk to the UK’s burgeoning economic recovery, Bank of England governor Mark Carney said yesterday.
“The biggest risk to financial stability, and therefore to the durability of the expansion, those risks centre in the housing market,” said Carney.
He added that the housing market has “deep, deep structural problems” stemming from a lack of supply. “The longer term structural issue as I think you know is there are not sufficient houses in the UK,” Carney said, speaking on Sky News.
His comments are the strongest hint to date that the Bank could act on its new responsibilities for financial stability soon, either by intervening in the housing market or curbing the controversial Help to Buy scheme.
Property site Rightmove said today that the average asking price of a London house has risen in value by an astonishing £4,405 a week so far in 2014 – a near £80,000 jump since January – adding to the mountain of evidence showing how frenzied the housing market has become in the capital.
Pressed on what the Bank could do about the country’s dire housing supply crisis, Carney said: “We’re not going to build a single house at the Bank of England and we can’t influence that.”
But the governor reinforced comments made last week, when he said that the Bank would rather use its new financial tools to cool the market than hike interest rates.
Carney said the Bank stood ready to tighten standards on capital and underwriting, but gave no suggestion that policymakers on Threadneedle Street would take more immediate monetary policy action.