Britain desperately needs more housing to stop prices spiralling out of control and avoid pitching us into a new financial crash, the Bank of England warned today.
In his toughest remarks yet on the overheating property market, Bank governor Mark Carney also demanded tougher restrictions on mortgage lending and called for the Help to Buy scheme to be scaled back.
His comments came as new figures showed prices rising 16.3 per cent a year in London, where buying a home is becoming an increasingly distant dream for many people.
Mr Carney pointed out there were twice as many homes being built in his native Canada where there are half as many people. ‘There are not sufficient houses built in the UK,’ he said.
He also spoke of ‘deep, deep structural problems’ in the housing market, which posed ‘the biggest risk to financial stability’.
Mr Carney made his comments on Sky News’s Murnaghan programme where he admitted the housing market was his biggest area of concern.
The Bank was considering measures such as limiting the number of mortgages approved or introducing a new affordability test for borrowers.
He added: ‘We don’t want to build up another big debt overhang that is going to hurt individuals and is very much going to slow the economy in the medium term.’
Shelter chief executive Campbell Robb said Mr Carney’s words would ‘ring a bell with the young people and families who are hearing good news about the economy but still aren’t finding it any easier to climb on the property ladder’.
David Cameron told Sky that Mr Carney was ‘absolutely right’ about the need to build more homes.
But he insisted: ‘The building of houses is going up. If you talk to any housing developer at the moment, or builder, they will tell you that the Help to Buy scheme has been hugely helpful in bringing forward more development or house building.’
18 May 2014 | 10:29 pm – Source: metro.co.uk