Mark Carney says UK housing market in widespread recovery

Mark Carney Mark Carney said there was little he could do to cool the London market

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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.


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  • rate this

    Comment number 28.

    23. Exactly, looks like the BBC department of propaganda have chosen to adopt a different spin.

  • rate this

    Comment number 27.

    Growth growth growth, that's all that matters to them.

    You cannot sustain infinite growth on a finite planet.

  • rate this

    Comment number 26.

    "UK housing market is generally recovering..."

    By recovering, he means that prices are rising, which means:

    MORE people will be unable to buy their own house.
    MORE people will be paying a greater % of their income in rent.

    The REAL recovery people want to hear is MORE money in their pockets - higher wages, lower taxes and lower costs of basics such as utilities.

    ..unless you're RICH ofcourse!

  • rate this

    Comment number 25.

    Why must so many people, who are supposedly responsible, talk about an increase in price of property, which is already grossly overvalued, as a Good Thing?

    Greece has had a 60% fall, and it is that above all which has put real (not debt) spending money back in pockets, and paved the way for recovery.

    The fact that all our banks have been little more than property speculators is strangling us.

  • rate this

    Comment number 24.

    Increasing capital requirements does not rein in bankers pay. That is a naive comment and one that insults the viewer. Really Governor, you can do better. We all know that increasing capital requirements will only have one effect and that is to defer further the restoration of dividend payments to the shareholders. Will we shareholders (including HM Govt) ever learn?

  • rate this

    Comment number 23.

    10 minutes ago this story was about what Carney had said about banker's bonuses. Now it's been transformed into what he said about the housing market, with the bonus comments little more than a footnote.

    Does anyone else think the story's change of emphasis is a little strange ?

  • rate this

    Comment number 22.

    opt outs and loopholes are deliberately built into the banking and tax systems to be exploited by those in the know...

    this is a non story

  • rate this

    Comment number 21.

    If house prices are on the up again, it is not 'recovery', it is further stress and pressure on those of us who can't afford one and are watching goalposts move farther and farther on.
    So we all get stuck in rented places paying the idle rich landlords. What is going to happen when this abandoned generation get to retirement age? Oh yes, we can work til we drop. The rich are ok. Love you all too.

  • rate this

    Comment number 20.

    So, let's get this straight. We must ensure these people are paid obscene bonuses as they are so brilliant, they will take their talents elsewhere if we don't? Would these be the same brilliant/talented bankers who brought about an almost total collapse of the whole system? Never mind a bonus, there are some out there who should be in prison.

  • rate this

    Comment number 19.

    '@3 Yoda 'who will the anti capitalist, pro public sector BBC find to pick on now...'
    Are you kidding, Capitalism failed throughout Europe and is being propped up because Governments reverted to Socialist principals ie. State intervention. The leeches are worming their way back in with Osbourne's help !

  • rate this

    Comment number 18.

    The banks will always find a way to pay huge bonuses.Barclays can make a loss and still do it proves this.If it is tied in with paying ALL staff the same percentage it might make them hesitate and with no redundancies( save top bods, can always manage without them!) It's about time banks got back to what they were not just being money manipulators.They are no longer trustworthy.

  • rate this

    Comment number 17.

    Carney is a clown.

    His solution to the bursting of a debt fuelled binge? More frantic borrowing, and houses at even more extreme multiples of earnings.

    And when the inevitable happens and it pops again, he'll claim no one saw it coming just like the last clown heading the BoE did.

    I'm emigrating, just hope it get out in time!

  • rate this

    Comment number 16.

    Oh well forward guidance is dead and buried, what a flop, - now he’ll manage our accumulated wealth by controlling the housing market – you cannot be serious.

  • rate this

    Comment number 15.

    Few outside banking will grasp the detail or implications of change in bank capital reserve requirements or in banker bonus deferments, but all should be enabled to understand these are measures knowingly 'designed in vain', to nudge for public consumptinrather than eliminate the corruption that must characterise any investment system (public or private) ruled by inequality, conflict of interest.

  • rate this

    Comment number 14.

    I'm not sure I fully understand what he means by 'recover'.

    If this means house prices are once again inflating at a criminally disproportionate rate to wages, then yes, they are recovering.

    This is obviously fantastic news, but not so much for people on the property ladder look to buy larger properties, and disastrous news for those not on the property ladder.

    I see this as more of a failure.

  • rate this

    Comment number 13.

    The supposed squeeze on bonuses never happened. The only people who got paid less in banking were the mid-level staff, the ones who actually do most of the work. These will also be the only victims in the event of a 'Claw back'.

    Bonuses and bonus 'shares', are another future scandal for the banks that'll surface in a year or two, you read it here first.

  • rate this

    Comment number 12.

    So the bankers want us to hope that in around 6 years time the Basel III rules might curb excessive banker bonuses.
    We have already waited 6 years for the government to do something to curb these excessive bonuses

  • rate this

    Comment number 11.

    The only way to prevent this crazy bonus culture is legislation or other enforceable rules, such as by a regulator.

    Whenever they are challenged on bonuses, any individual bank claims that all the others will get all the "good" staff if they don't keep upi pay - so the only way to stop this fallacy is to stop them all.

    Let's make sure it's done, and policed by a body that has real teeth.

  • rate this

    Comment number 10.

    So, more capital retained, so less for business investment, but then "What we haven't seen yet is business investment picking up " and how is Gideon going to finance his housing bubble?

  • rate this

    Comment number 9.

    Two ways to recapitalise the bank, retain capital by a) not paying bonuses or b) reducing staff costs or c) increasing costs to customers,

    I think we can rule out b) and c).


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