Carney Urges Calm On House Price Bubble Talk
The Governor of the Bank of England Mark Carney has moved again to soothe fears of a looming house price bubble.
A day after the business secretary Vince Cable told Sky News he favoured reconsidering the second phase of the Help To Buy scheme, Mr Carney told MPs he was "vigilant" over the issue of such initiatives potentially fuelling price spikes.
Appearing before the Treasury Select Committee of MPs, the governor said the Bank was watching the housing market closely as it recovers - but insisted the market pick-up should be seen in context and remains a third to a quarter below pre-crisis levels.
Talk of bubbles intensified on Wednesday when it also emerged that a record number of people were working in estate agents.
Over the past year, 77,000 people had joined the sector, with the number growing so quickly in the three months to the end of June that it amounted to the fastest growing segment of the national workforce.
There are now 562,000 employed in the property business, up 100,000 on the pre-crisis boom of 2008, the Office for National Statistics revealed.
In contrast, the building industry is 300,000 smaller than it was at its peak.
Chancellor George Osborne dismissed fears that Help To Buy would add to the risk of a housing bubble, despite Mr Cable's concerns.
The current scheme allows buyers with only a 5% deposit to buy a new-build property valued at up to £600,000 - it will be extended in January to include a mortgage guarantee for buyers with deposits of between 5% and 20% to buy any age of home up to the same value.
Mr Cable said: "We should certainly think about how it should come into effect, indeed whether it should come into effect in the light of changing market conditions. We don't want a new housing bubble."
Other experts in the field agree, with the Royal Institution of Chartered Surveyors considering there is a "real risk" of housing inflationary pressures.
The Adam Smith Institute says the measures will raise demand for houses, but not supply and will therefore only exaggerate existing competition.
The institute says the Government needs to shake up planning laws to improve the supply and affordability of property.
"We're no longer a nation of shopkeepers," said Danny Gabay from economics consultancy Fathom, citing Napoleon's thoughts about the British, "We're becoming a nation of estate agents."