POLITICS

Bank Of England Can't Stop UK House Prices Soaring, Warns Mark Carney

17/02/2014 10:13 GMT | Updated 17/02/2014 10:59 GMT
ASSOCIATED PRESS
Bank of England Governor Mark Carney speaks during the bank's inflation report news conference in London, England, on Wednesday Feb. 12, 2014. Bank of England Governor Mark Carney sought Wednesday to assure homebuyers and businesses that U.K. interest rates won't rise any time soon because the economic recovery is still fragile. (AP Photo/Dan Kitwood, Pool)

Mark Carney has warned that he cannot stop house prices soaring out of control as new figures show the average asking price has risen above £250,000.

The Bank of England governor told the BBC's Andrew Marr Show on Sunday that he was "very conscious" of Britain's "history of boom and subsequent bust in the housing market" but he could only "watch" the housing market.

London's housing market has stood out in Britain for how expensive its properties are and how quickly house prices are rising in the capital, with analysts blaming it on the flow of foreign buyers, paying in cash, for ultra-prime properties.

“The top end of London is driven by cash buyers. It’s driven in many cases by foreign buyers. We as the central bank can’t influence that," he said.

“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 the knock-on effect.”

Carney's comments come after politicians argued over whether the Bank of England was able to "pull the plug" on schemes like the government's Help to Buy mortgage guarantee scheme, which critics say is helping push up house prices and inflate a house price bubble.

In response to Carney's comments, Liberal Democrat housing minister Stephen Williams said it proved the case to slap wealthy property buyers with a "mansion tax".

He said:: “There are many arguments for a mansion tax, and this is certainly one of them.”

“People can be very creative about tax avoidance in many ways, but a mansion tax is a tax that is virtually impossible to avoid. It’s unlikely that a charge of £10,000 on a £3 million house is going have a catastrophic effect on the owner, when house-price inflation outstrips 1 per cent every year. But I have no doubt that will be in the scare-story toolbox of those who oppose this tax.”

According to figures from the property website Rightmove, house sellers' asking prices saw their biggest year on year jump since 2007 in February.

Rightmove said that asking prices have risen to £251,964 on average across England and Wales, which is 6.9% higher than a year ago and the highest annual rate of growth since 2007.

This means that new sellers are now asking over £16,000 more for their home than those who came to market a year ago.

Miles Shipside, director of Rightmove, said: "The housing market can only help to support a wider economic recovery if there is a sustained boost to property supply and not just buyer demand, and there is some early evidence that this is happening.

"However, supply and demand imbalances remain and are getting worse in many markets, as a result of years of under-provision of additional housing stock, especially in the areas where the local economy and employment are strong."

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