Bosses warn over UK housing market

January 28th, 2019 / / categories: 深圳桑拿网 /

Business leaders have delivered a warning about overheating in Britain’s housing market, saying interest rates will need to rise early next year.


In its regular assessment of UK plc’s prospects, the Confederation of British Industry (CBI) has raised its growth forecast for this year from 2.6 per cent to 3.0 per cent.

But it also highlighted concerns that the recovery could be derailed by uncertainty around the general election, urging politicians to push ahead with boosting the supply of homes and taking decisions on major infrastructure projects.

Director-general John Cridland said property values were expected to rise by 8.2 per cent in 2014, and 5.1 per cent in 2015.

“We have to remain alert to the risks posed by unsustainable house price inflation, and the (Bank of England) Financial Policy Committee is poised to act when necessary,” he said.

“Housing has come back under the spotlight as annual house price inflation figures have reached double digits on some measures.

“While housing transactions are still running almost 30 per cent below their last peak in 2006, they are picking up steadily.”

Although London house prices have risen 25 per cent above the 2008 peak, this has in part been fuelled by foreign cash buyers.

“Outside London, prices remain around 2.0 per cent below peak figures with an even greater difference when you move outside the South East.”

The CBI previously predicted that the central bank would have to start raising rates in the third quarter of next year – but has now brought that forward to the first quarter.

Cridland declined to say whether the government’s Help to Buy scheme – which offers guarantees so that people without large deposits can get mortgages – should be wound down.

But he suggested the initiative was only having a marginal impact on the market, with the overwhelming majority of purchases in which it is used taking place outside London.

He added that it was crucial for governments to focus on increasing housing supply.

The CBI’s assessment said political uncertainty remained a “major risk to the recovery” and parties needed to show they would “stick with what is working” after the election.

“That means the new government, of whatever colour, keeping the deficit reduction strategy on track,” chief policy director Katja Hall said.

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