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UK must puncture property bubble, Commission warns

Victorian housing in Nottingham is far more affordable than in London. [Natesh Ramasamy/Flickr]

Victorian housing in Nottingham is far more affordable than in London. [Natesh Ramasamy/Flickr]

The United Kingdom must curb rapidly rising property prices, particularly in London, and raise taxes rather than just slash spending, to increase its resilience to financial shocks, the European Commission warned yesterday (2 June).

The EU’s executive called for the UK government’s flagship mortgage initiative for first time buyers, the Help to Buy 2 Scheme, to be adjusted and for the supply of housing to be increased.

British house prices have risen at their fastest pace in annual terms in nearly seven years, according to data released today (3 June) by lender Nationwide. The average cost of a UK home is £186,512 (about €229,144) higher than ever before, after 13 months of consecutive growth.

House prices rose 11.1% in the last year, compared with May 2013.  It’s the biggest jump since June 2007, taking prices beyond their pre-crisis high and raising concerns of a housing bubble.

The lack of housing is forcing buyers to take on higher mortgages, take on extra debt and pose a risk to financial stability as a result, the Commission said in its annual economic policy recommendations to member states.

Read whole story here>>

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This entry was posted on November 10, 2014 by in Financial services, Journalism, UK politics and tagged , , , .

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