Rising UK House Prices

The latest data from the ONS show that UK house prices rose by 8% in the year to March 2014. Most of the increase was in England, with house prices in N. Ireland rising only 0.3%.  Indeed, the increases in England were mainly driven by London (17.0%), the South East (6.1%) and East (6.6%). This, allied to the build-up of household debt, has caused Mark Carney, Vince Cable, and the Prime Minister to sound warnings in recent days over the health of the housing market and the dangers the over-heating housing market poses for the economy - click here, here and here.

Why have house prices in London and the South East risen so much? Is it a supply problem? Is it a demand problem? After all, these are the two areas of the economy where there is most job creation and pressure on space. Or could it be a combination of the government's Help to Buy scheme and Bank of England's radical monetary policy, which has kept the cost of borrowing artificially low?  


Popular Posts