UK house price upswing out of Bank’s hands

BEN BROADBENT stressed the Bank of England’s limited ability to control house price inflation yesterday, as researchers warned that even buy-to let landlords were being priced out of London’s frothy property market.

“It is not monetary policy or macroprudential policy to target asset prices… What really matters for financial stability is the amount and riskiness of debt used to finance purchases of assets that may be overvalued,” he said, adding that growth in risky mortgages is still low. Broadbent will begin his deputy governorship in July.

Estate agency Beresfords also said yesterday that valuations were rising so rapidly in the capital that buy-to-let landlords were being priced out, with yields from rental prices increasingly thin.

Broadbent’s comment on lending was reinforced by two further surveys yesterday. The latest report from the Royal Institute of Chartered Surveyors (RICS) showed housing demand dropping for the first month in two years, blaming new mortgage regulations and declining market supply.

Chartered surveyors e.surv also report today that mortgage lending dropped to its lowest level since last June during May this year.