The real estate surveyors want the central bank’s Financial Policy Committee should consider capping the yearly house price inflation to at an average of 5% to prevent another crisis in the housing market from “reckless bank lending and a dangerous build up in household debt”.
The fears have been rising that a recent surge in housing market activity will result in borrowers over-stretching themselves, with recent figures from Halifax showing that prices are 5.4% higher than last summer. Rics has told that 40% of surveyors have been seeing increases in the house prices rise rather than decline, the highest proportion in almost seven years. According to Rightmove, asking prices in London are up by 10% year-on-year.
“This cap would send a clear and simple statement to the public and the banking sector, managing expectations as to how much future house prices are going to rise. We believe firmly anchored house price expectations would limit excessive risk taking and, as a result, limit an unsustainable rise in debt.”
On Thursday, Bank of England governor Mark Carney told MPs about monitoring the housing market but also expressed unwillingness to accept the report’s recommendations by Rics.
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