BoE surprised
The strength of house price inflation has surprised the Bank of England, according to Monetary Policy Committee member Kate Barker.
Housing market surveys for August showed robust price growth, indicating that the surprise rise in interest rates to 4.75% last month has had little effect on demand.
"House prices are rising faster than earnings and I have to say that's a surprise," Barker said in an interview with the Daily Telegraph. In the very long run, it is difficult to think of house price growth being perpetually above earnings, unless there's something else going on, like a constraint of supply."
Even the most affordable region in the UK, Yorkshire and Humberside, still has a house price to earnings ratio of 8x the average salary.
Housing market surveys for August showed robust price growth, indicating that the surprise rise in interest rates to 4.75% last month has had little effect on demand.
"House prices are rising faster than earnings and I have to say that's a surprise," Barker said in an interview with the Daily Telegraph. In the very long run, it is difficult to think of house price growth being perpetually above earnings, unless there's something else going on, like a constraint of supply."
Even the most affordable region in the UK, Yorkshire and Humberside, still has a house price to earnings ratio of 8x the average salary.
posted by ew at
11:33 AM
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