Bank of England governor warns housing market is biggest threat to UK economy

May 18, 2014



The governor of the, , has warned that the state of the housing market in the is the current biggest domestic threat to the country's economy, due to lack of house building, and regulatory issues.

In an interview to be aired on today, he said the housing market is the "biggest risk" to the economy and has "deep, deep structural problems". Of house building he said: "There are not sufficient houses built in the UK. To go back to, there are half as many people in Canada as in the UK, twice as many houses are built every year in Canada as in the UK and we can't influence that."

"We're not going to build a single house at the Bank of England. We can't influence that. What we can influence [...] is whether the banks are strong enough. Do they have enough capital against risk in the housing market?"

Carney also said the Bank of England would look into the procedures used to issue loans and mortgages to see if they were being granted appropriately: "We'd be concerned if there was a rapid increase in high loan-to-value mortgages across the banks. We've seen that creeping up and it's something we're watching closely."

responded to Carney on behalf of the government, saying the government "inherited a broken housing market, but our efforts to fix it are working". "We've scrapped the failed top-down planning system, built over 170,000 affordable homes and released more surplus brownfield sites for new housing. We've also helped homebuyers get on the housing ladder, because if people can buy homes builders will build them. Housebuilding is now at its highest level since 2007 and climbing. Last year councils gave permission for almost 200,000 new homes under the locally-led planning system and more than 1,000 communities have swiftly taken up neighbourhood planning. It's clear evidence the government's long-term economic plan is working."

Earlier this month, the called on the UK government to "tighten" access to the '' scheme introduced by  and the  in 2013. 'Help to Buy' has also recently been criticised by three former Chancellors of the Exchequer — the  and, and former  Chancellor. Darling said: "Unless supply can be increased substantially, we will exacerbate that situation with schemes like Help to Buy."