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.

Cash

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."

'Clarity'

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.

Limits

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
    -1

    Comment number 108.

    19. Etiquette
    ... propped up because Governments reverted to Socialist principals ie. State intervention
    ---
    'Socialism' is people in power hoarding all the wealth now? If you hate socialism because it threatens your aspiration of perpetual riches beyond the reach of your neighbour, why accuse the people who appear to be living your dream of it? Did you end up on the wrong side of the gap?

  • rate this
    +13

    Comment number 107.

    Consequences of higher house prices combined with stagnant wages
    1. Higher personal debt as a proportion of income for those who can afford to buy or move.
    2. Higher personal debt for people using their property as an asset to borrow against.
    3. Owning a house becomes unaffordable to most would be first time buyers. Rental properties become more expensive.
    4. Everyone has less disposable income.

  • rate this
    +2

    Comment number 106.

    93 James StGeorge "Above all get rates up high and fast, help all the ordinary people" You are being dishonest with yourself. Do you honestly believe "ordinary people" have masses of savings? You mean get interest rates so moderately wealthy like you can have a slightly better life at the expense of beggaring "ordinary people". Lucky for you Carney seems to agree through housing!

  • rate this
    +6

    Comment number 105.

    Yes how wonderful another unsustainable "recovery", built upon a housing bubble Ponzi scheme. "Recovering"? lol They are already overvalued, servicing mortgage debt shouldn't be taking up over half of peoples wages for the majority of their life. However a great way for the ruling classes to reduce freedom and democracy and increase their own power and control. Mort(Death)gage(lock).

  • rate this
    +2

    Comment number 104.

    Debt slavery is the only industry left in this country.

  • rate this
    +7

    Comment number 103.

    @95.Tim Browning

    ''...But then there are people on here that think wages have fallen. lolz...''

    Any salary rise below inflation is effectively a fall in a persons income making mortgages/rent more unaffordable lolz.

  • rate this
    +5

    Comment number 102.

    30 years ago my parents had a mortgage of around 3 times their combined annual income, paying it off in 8 years. At 26, for just a 2-up 2-down, I'm looking at having a mortgage of around 12 times my income. Meaning a 20-25 year mortgage. And this is in the north. Council houses, inflation and the "Right-to-Buy" scheme have made it nigh impossible to do anything but live at home.

  • rate this
    -26

    Comment number 101.

    93.JamesStGeorge
    Housing is three times over priced. It is still in a sustained bubble.
    -
    50's avg house was 10 * salary, in the 70's avg house was 10 * salary. Its currently 5 times unless you live in London where its 10 * salary. Our parents took advantage of very cheap foreign labour for more disposable income which is now starting to balance. We're returning to pre globalisation levels

  • Comment number 100.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
    +3

    Comment number 99.

    Do we believe - still more than 70% young people are unbale to afford their own houses - This is not a recoverey I think!

  • rate this
    +6

    Comment number 98.

    COMING SOON!......Bricks & mortar for the wealthy...Ikea flat-pack housing for the rest.

  • rate this
    +13

    Comment number 97.

    Every period of sustainable prosperity in the world has occurred when the gap between the richest and poorest has been smallest, for example, from 1950 - 1970/80. It is the middle class who fuel the economy. As wages have dropped for all but the top earners, economies have become unstable and crashed, e.g. 1928, 2007.

  • rate this
    +7

    Comment number 96.

    Rather than get distracted about the detail in this BBC article, its the choice words in the headline that grab peoples attention.

    Quid pro quo, the subliminal affect is to bury into the subconscious that the UK is finally repaired and on the road to success. It's another piece of propaganda adding to the buttering up process for May 2015.

    The travesty is, the UK is up to its neck in debt.

  • rate this
    0

    Comment number 95.

    70. Goves Silly Temper Tantrum
    3 MINUTES AGO

    I doubt Mark Carney is going to lose any sleep on that one.

    He gave forward guidance, you made up your own and then are surprised he didn't follow yours instead of his own.

    But then there are people on here that think wages have fallen. lolz

  • rate this
    +8

    Comment number 94.

    So when our electricity and gas bills start increasing again, that is a "recovery"?

    When my car insurance increases I can say the market for car insurance is "recovering"?

    How is increasing living costs and pricing British workers out of the global market for jobs "a recovery"?!

  • rate this
    +1

    Comment number 93.

    What an idiot! No doubt he regards the energy market as 'recovering' at every price rise.

    Housing is three times over priced. It is still in a sustained bubble. Money is grossly too cheap. Deposits are enormously too small.

    Restrict loans to 70% of value, and no more than three times basic pay. Above all get rates up high and fast, help all the ordinary people, not the rich's assets.

  • rate this
    +9

    Comment number 92.

    Recovering? Isn't that a bit like saying that your pneumonia is recovering because your temperature is going up again?

  • rate this
    +155

    Comment number 91.

    So prices are rising, but the majority of buyers have no mortgages. So the rich are investing, buying to let, renting out at immense profit, and the UK population still can't buy their first house. Prices need to come down, not rise further. We all thought we were rich because we owned our own home, it was a lie, the real property owners don't live in most of their properties.

  • rate this
    +9

    Comment number 90.

    74. Monotone
    Unbelievable that our so-called economic experts seem to want to go down the same old road - creating another unsupported bubble of unearned wealth which will inevitably collapse in a few years' time. Have they learned nothing? And do they think WE will fall for it again?

    ######### 'WE' won't, but a greedy majority will ##########

  • rate this
    +40

    Comment number 89.

    For the Generation who studied hard at School, studied even harder at University, and are either living with their parents or renting owning a home is an improbable dream.

    Yes there is a thriving market in property, but rather too many people are excluded from it.

 

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