12th June 2014
The Business Secretary Vince Cable has urged that steps have to be taken to ensure the UK’s housing boom does not get out of control.
Speaking to the BBC, Cable said the desires of potential homeowners should be balanced against the stability of the economy, adding that he was appalled that some banks had been lending up to five times a mortgage applicant’s income, suggesting a “stable level” was up to 3.5 times.
He said: “In the short-run, the immediate problem is to stop this boom getting out of control.” Cable’s comments came ahead of the Chancellor’s Mansion House speech.
While the latest house price monitor from Halifax reported that home prices soared by 3.9% month-on-month and 8.7% year-on-year in May, the Business Secretary’s comments follow reports suggesting that the UK’s property market has actually cooled-off slightly. The Bank of England recently reported that mortgage approvals for house purchases fell for a third month running in April, to a 9-month low of 62,918, with the introduction of tougher affordability checks as a result of the Financial Conduct Authority’s Mortgage Market Review, being cited as a possible reason for the decline
In addition, the latest market update from the Royal Institute of Chartered Surveyors (Rics) has found that new buyer interest is now rising at the slowest pace since February 2013 and the organisation is now projecting average annual house price inflation, at a national level of 5% over the next five years, which has edged down fractionally in recent months. In contrast, price expectations over the same time horizon in London have plummeted from a peak of just over 9% as recently as March to now just under 5%. But overall the survey concluded that house price gains are still strong across all of the UK, with the South East and East Anglia experiencing the sharpest increase for a second consecutive month.
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