Prediction for UK Home Price Increases Stokes Fears of a Bubble
British real estate website Rightmove has revised earlier estimates and tripled its predictions for the rise in house prices for the current year to twice the price of inflation. At the start of the year the forecast was for a rise of 2% which later became 4% and now stands at 6%. Some areas of the UK have already exceeded this, with the West Midlands and London up 6.8% and 8.2% over the past year respectively.
The Bank of England meets this week to discuss the matter and debate options to respond to the situation. Over the weekend the Royal Institution of Chartered Surveyors (RICS) called on the Bank to restrict growth to 5% a year to "prevent another housing bubble, reckless bank lending and a dangerous build-up in household debt", a view supported by the Liberal Democrat president, Tim Farron and Business Secretary Vince Cable. Both have called for the Conservative's 'Help to Buy' scheme, which will be expanded in January to include existing properties, to be delayed to avoid, in Mr Fallon's words, "the danger of a re-inflating housing market".
The Deputy Prime Minister and Liberal Democrat President Nick Clegg dismissed the claims, stating that the country was "nowhere near back to that unsustainable housing bubble", a view supported by the Chief Secretary to the Treasury, Danny Alexander.
Rightmove has reported that average asking prices for September had increased by 4.5% on this time last year and that with fewer houses on the market their housing market analyst, Miles Shipside, expected "an autumn price surge as buyer confidence and activity continues to increase".