Mark Carney says UK housing market in widespread recovery
- 16 February 2014
- From the section Business
Bank of England governor Mark Carney says the UK housing market is generally recovering.
Mr Carney told the BBC's Andrew Marr programme that, looking at the UK as a whole, "we are now seeing house prices begin to recover, so it is a more generalised phenomenon".
He said the only area where prices had not picked up was Northern Ireland.
He also said there was little the bank could do to cool the London market, where prices were rising far faster.
Prices in London are rising by about 10% a year, but Mr Carney said a change in interest rate policy - not on the cards in any case until the recovery is well established - would not cool the market as a significant number of properties were bought without a mortgage.
Asked if he was concerned about the very fast-spiralling London property market, Mr Carney said: "Much of what's driven in London, of course, is not mortgage-driven but is cash-driven.
"It's driven, in many cases, by foreign buyers. We, as a central bank, can't influence that.
"We change underwriting standards - it doesn't matter, there's not a mortgage. We change interest rates - it doesn't matter, there's not a mortgage, etc.
"But we watch it and we watch the knock-on effect."
Mr Carney reiterated his belief that UK interest rates would not return to pre-crisis levels of around 5% until all spare capacity was being used in the economy.
He said: "What we've had thus far is a consumer-led recovery.
"What we haven't seen yet is business investment picking up.
"It's part of the reason why we're trying to provide as much clarity to business that the path of monetary policy, the path of interest rates, is going to be calibrated very carefully, to ensure that only when we see sustainable growth in jobs, in incomes, and in spending will we make adjustments."
Last week, Mr Carney overhauled the Bank's interest rate policy to reflect falling unemployment and the economic recovery.
The Bank's rate policy will now be determined not just by unemployment, but by a wider range of indicators.
Mr Carney also discussed bankers' bonuses, saying new rules ordering banks to keep back more capital could hold back bonus payouts.
He said the rules, designed to protect banks from future economic shocks, would prevent them from paying increased bonuses if that would cause capital levels to fall.
The rules, known as Basel III, will come into force near the end of this decade and will apply internationally.
Mr Carney said they would have a real impact and should change banks' behaviour.
He also suggested that bonuses could be deferred for an even longer period than the current three to five years, giving a greater time frame in which they could be clawed back, should it emerge later on that unnecessary risks had been taken.
Last week, Barclays increased its bonus pool despite posting a fall in annual profits.