The UK housing market is “on fire”, and as a result is likely to hit those without property especially hard, Andy Haldane, chief economist at the Bank of England, has said.
The housing market has been fuelled by a combination of government incentives for buyers, like the stamp duty holiday, more demand from households with more savings after the lockdowns, and a lack of homes for sale, Haldane said.
Speaking at a webinar organised by the University of Glasgow, the chief economist said the recent rise in house prices – which topped 10 per cent over the 12 months to March, according to official data – was very likely to worsen pre-existing wealth inequalities.
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The average house price went up £3,000 in May, according to the latest figures from Halifax, taking the average property price to a record high of £261,743.
In the 12 months to May, the average house price has increased by £22,000, according to Halifax data.
The government’s stamp duty holiday, which saw stamp duty scrapped on properties worth up to £500,000, is largely the reason behind the UK’s booming house prices in the last year.
Read about the UK Housing Market via our Specialist Residential & Buy to Let Division
Just last week the BoE’s deputy governor Jon Cunliffe said the Bank was watching the housing market “very carefully” in the wake of the boom.
Prior to that, Sir Dave Ramsden, another one of the central bank’s deputy governors, said the BoE expects the price pressures to be temporary.
“There is a risk that demand gets ahead of supply and that will lead to a more generalised pick-up in inflationary pressure,” Ramsden told the Guardian. “That’s something we are absolutely going to guard against. We are looking carefully at the housing market and a raft of real-term indicators.”
By Hannah Godfrey
Source: City AM
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