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
    +5

    Comment number 128.

    101. Where am I , "50's avg house was 10 * salary, in the 70's avg house was 10"

    That is very obviously RUBBISH. You should go and actually CHECK. maybe you are doing a "Tory" with the figures or something? Using a corrupt way to calculate an average or something. Traditionally it has been that semis are about 3.5 times av earning since banks lend 3.5 av. earn

  • rate this
    +65

    Comment number 127.

    My definition of a booming housing market would be record numbers of first time buyers being able to buy and maintain mortgage payments on their homes.

    What is going on is housing prices rising, making investors and wealthy foreign landlords who are in a race to buy up the uk's housing market, forcing the prices up. - This is my definition of capitalism gone wrong.

  • rate this
    +15

    Comment number 126.

    Cameron's Big Society living in tiny unaffordable housing. The UK has long since ceased to be the laughing stock of Europe...now they just look on us with pity.

  • rate this
    +14

    Comment number 125.

    .


    Since when can a bubble at risk of bursting be classed as "recovering"...???


    By the same method of utterly abusing the English language by bankers defining their "performance related bonuses" as reward for turning up to work regardless of how much money they lost this year......


    .

  • rate this
    +10

    Comment number 124.

    The Canadian housing bubble that Mark 'Clooney' inflated blew up in his face so expect the same here soon...

  • rate this
    +3

    Comment number 123.

    That's because the tax payer is to bale out new home owners if in trouble,not banks, so no risk to them. We have well over million empty homes which should be renovated. Gov very friendly with developers/bankers, so due to cement covering the land we have horrendous floods. Plus more Syrians/Turks waiting to come illegally at Calais as we are only country to give free house/schools/NHS etc

  • rate this
    +9

    Comment number 122.

    Carney told the BBC that, looking at the UK as a whole, "we are now seeing house prices begin to recover, so it is a more generalised phenomenon".

    ---

    Is this bloke a comic. Recovering. To what unsustainable bubble prices. This bloke is showing his true colours, bank on me chaps. Or is he saying that the only thing in the economy which can drive the economy is housing prices

    Echoes of 2005

  • rate this
    +10

    Comment number 121.

    As long as economists and governments focus on house prices going up as a positive, when incomes are not supporting the rise, we are doomed to boom and bust. Over lending on house prices is the reason the banks are in the mess and now the Govt. are lending too to get us on the this "house ladder"! oh what a buzz word of death! Did Cameron never play "snakes and ladders"?

  • rate this
    +10

    Comment number 120.

    800K and Carney can't afford to pay his own housing costs.

    The rest of us use our salaries to pay for housing and all other living costs.

    I'm wondering what the rich elite think their salaries are for?

    What is Carney doing with his 800K, or is it paid directly into an offshore haven?

  • rate this
    +101

    Comment number 119.

    Why do we have to wait until the end of the decade before new banking rules come in? The financial crisis caused by the bankers didn't have to wait and the financial hardships suffered by hundreds of millions of ordinary people are happening NOW! Why should they wait, just for the benefit of a privileged few?

  • rate this
    +4

    Comment number 118.

    100. Lightmare

    It has nothing to do with politics, buzzwords, revolution, economic or capitalism.

    Some people value equality over individual economic prosperity.

    It is impossible for those who fall into the later to understand how people can care for the 'vulnerable' who, in your opinion, do not contribute to society

    True equality is unachievable, but that shouldn't stop people trying

  • rate this
    +7

    Comment number 117.

    Is it any wonder ....
    with Govt buying votes with Right to Buy (600K for a 1st time house!!),

    endless property progs insinuating that moving property is good

    endless media stories about profit that can be made from buy to let

    crazily low interest rates tempting folk into debt in quite a morally evil way I feel.

    It would be stunning if the property 'market' (sic) wasn't looking up!

  • rate this
    +17

    Comment number 116.

    "Recovering", to a banker, means prices are going up so that the banks can make more money by lending larger mortgages, so bankers can reward themselves with larger bonuses.

  • rate this
    +17

    Comment number 115.

    Why is this treated as good news! Increased house prices, more debt = greater poverty.

    Was not one of the major causes of the current recession caused by stupidly high house prices?

  • rate this
    +44

    Comment number 114.

    The sad thing is that even when the party in power changes after May 2015 nothing will really change for the majority of the population.

    When politicians say that "we are all in this together" and are "one nation" you know the opposite is true.

  • rate this
    +5

    Comment number 113.

    What a poor BOE governor Carney is turning out to be. He is turning a blind eye to what is happening in the real economy, and instead playing politics with his pal Osbourne.
    It is obvious that the BOE should be giving forward guidance on slowly increasing interest rates now, to allow businesses and individuals to adjust their debt levels gradually.
    The forthcoming election is preventing this.

  • rate this
    +3

    Comment number 112.

    The research reveals families with children are in the most precarious situation. 43% could not pay for their home for more than a month, and nearly a quarter (23%) could not meet their payments at all.
    In total, 3.9 million British families may be just one paycheque away from losing their family home.
    Can the government afford to pay their debts if interest rates rise as well?

  • rate this
    +5

    Comment number 111.

    You Aint Seen Me Right
    Yes you are right! I've noticed for some time now that the Tories have yet another mouthpiece! Goebbels has got nothing on this crowd!

  • rate this
    +13

    Comment number 110.

    Don't forget, Carney is a banker just like, say, Bob Diamond.

    Human beings are an unwelcome variable in the calculations of these parasites.

  • rate this
    +64

    Comment number 109.

    Is this man always going to tell us the obvious, and change the goalposts each time his predictions fail to materialize?

    I am distinctly unimpressed by his performance to date, and allowing house prices to run away through ridiculously low mortgage rates will ultimately bring much sorrow to those borrowers who, when rates rise, discover they can't meet the interest, let alone repayments.

 

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