Expectations of more house price rises in Britain at 14-year high
Expectations of future British house price rises have hit a 14-year high just as Bank of England boss Mark Carney signalled monetary policy would remain exceptionally loose despite the potential for them to jump at 'warp speed'.
Britain is growing faster than many other big rich economies although it has still not passed its pre-crisis peak. There are some concerns, however, that it is a housing-led recovery -- and a potential bubble -- spurred by government stimulus.
The Royal Institution of Chartered Surveyors said yesterday that 59pc of surveyors in November forecast prices would rise over the next three months, the highest reading since September 1999.
Speaking in New York ahead of the survey, Mr Carney signalled monetary policy was not about to be tightened even though there were potential dangers in the housing market.
"We're concerned about potential developments in the housing market," Mr Carney said. He said activity in the housing sector was lower than before the financial crisis, and bank underwriting standards had been "substantially transformed".
"But there is a history of things shifting in the UK and the housing market of moving from stall speed to warp speed and underwriting standards slipping. So we want to avoid that," Mr Carney added.
The RICS measure of house prices hit +58 in November, edging up from October to an 11-year high as government incentives and more optimism on the economy helped spur demand. Positive readings mean more members reported price rises rather than falls in the preceding three months.
Prices rose for a second consecutive month in every area of Britain, while the average number of homes sold per chartered surveyor grew to 20.6, up from 15.9 in the same period of 2012.
But RICS warned again of a lack of homes available to buy.
"If there is not a meaningful increase in new homes, the likelihood is that prices, and for that matter rents, will continue to push upwards, making the cost of shelter ever more unaffordable," said Simon Rubinsohn, RICS's chief economist. Separate data showed Britain was making some progress in slowly reducing its reliance on consumers. Manufacturing output rose for a second month in October but the country's trade deficit was bigger than forecasts.
In an upbeat message before the Christmas season, Mr Carney said Britain's recovery was showing signs it can reach self-sustaining momentum but no tightening was on the horizon.
"The Ghost of Christmas Yet to Come suggests that it is unlikely that equilibrium interest rates will return to historically normal levels any time soon," Carney said. (Reuters)