This article is from the source 'bbc' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at http://www.bbc.co.uk/news/business-27459663

The article has changed 8 times. There is an RSS feed of changes available.

Version 2 Version 3
Bank chief Mark Carney warns over housing market Bank chief Mark Carney warns over housing market
(35 minutes later)
The governor of the Bank of England has given his strongest warning yet about the dangers to Britain's economy posed by the booming housing market.The governor of the Bank of England has given his strongest warning yet about the dangers to Britain's economy posed by the booming housing market.
Mark Carney says the market represents the "biggest risk" to financial stability and the long-term recovery. Mark Carney said the market represented the "biggest risk" to financial stability and the long-term recovery.
He adds that there are deep structural problems which need to be addressed. He added there were deep structural problems which needed to be addressed.
In an interview to be shown later on the Murnaghan show on Sky News, he says the housing market has the potential to threaten the long-term recovery. In an interview to be shown later on the Murnaghan show on Sky News, he said the housing market had the potential to threaten the long-term recovery.
He says the Bank of England is "closely watching" rising property prices and the subsequent increase in large-value mortgages, which he warned could lead to a "debt overhang" which could destabilise the economy. He said the Bank of England was "closely watching" rising property prices and the subsequent increase in large-value mortgages, which he warned could lead to a "debt overhang" which could destabilise the economy.
Homes shortageHomes shortage
Mr Carney will say: "When we look at domestic risk, the biggest risk to financial stability and therefore to the durability of the expansion [of the economy] those risks centre in the housing market." Mr Carney said: "When we look at domestic risk, the biggest risk to financial stability and therefore to the durability of the expansion [of the economy] those risks centre in the housing market."
Mr Carney says the fundamental problem was a shortage of homes - and the Bank of England had no solution to that. He said the fundamental problem was a shortage of homes - and the Bank of England had no solution to that.
Instead, he says it will ensure banks have enough capital to withstand the risks of lending, and check lending procedures to ensure mortgages were given only to those who could afford them. Instead, he said it would ensure banks had enough capital to withstand the risks of lending, and check lending procedures to ensure mortgages were given only to those who could afford them.
He will say in the interview: "There are not sufficient houses built in the UK. To go back to Canada, 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. He added: "There are not sufficient houses built in the UK. To go back to Canada, 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.
"What we can influence is whether the banks are strong enough. Do they have enough capital against risks in the housing market, whether underwriting standards are tough enough so that people can get mortgages if they can afford them?"What we can influence is whether the banks are strong enough. Do they have enough capital against risks in the housing market, whether underwriting standards are tough enough so that people can get mortgages if they can afford them?
"And by reinforcing both of those we can reduce the risks that come from a housing market that has deep, deep structural problems. "And by reinforcing both of those we can reduce the risks that come from a housing market that has deep, deep structural problems."
The Nationwide Building Society has said annual house price growth in the UK rose by 10.9% in the year to April - the highest inflation rate for seven years.The Nationwide Building Society has said annual house price growth in the UK rose by 10.9% in the year to April - the highest inflation rate for seven years.
It said the average UK house price now stood at £183,577.It said the average UK house price now stood at £183,577.
Figures published by rival lender the Halifax, meanwhile, suggested UK house prices had risen by 8.5% year-on-year.Figures published by rival lender the Halifax, meanwhile, suggested UK house prices had risen by 8.5% year-on-year.
It said the average house price in the UK was £177,648.It said the average house price in the UK was £177,648.
The year-on-year comparison is calculated slightly differently by the two lenders.The year-on-year comparison is calculated slightly differently by the two lenders.
The Halifax compares the previous three months with the same three months a year earlier to give a smoother comparison, rather than a direct comparison of the equivalent months as calculated by the Nationwide.The Halifax compares the previous three months with the same three months a year earlier to give a smoother comparison, rather than a direct comparison of the equivalent months as calculated by the Nationwide.
'Broken market''Broken market'
BBC political correspondent Alex Forsyth said the governor's voice added to a chorus of concern.BBC political correspondent Alex Forsyth said the governor's voice added to a chorus of concern.
Sir Jon Cunliffe, one of the Bank of England's deputy governors, previously said it would be "dangerous to ignore the momentum that has built up in the housing market".Sir Jon Cunliffe, one of the Bank of England's deputy governors, previously said it would be "dangerous to ignore the momentum that has built up in the housing market".
David Blanchflower, a former member of the Bank's rate-setting Monetary Policy Committee, agreed the boom was "a threat to stability".David Blanchflower, a former member of the Bank's rate-setting Monetary Policy Committee, agreed the boom was "a threat to stability".
"The Bank is going to have to step in because, ultimately, if the house prices don't slow they're going to have to raise rates and that would be very harmful," he told BBC Radio 5 live's Sunday Breakfast."The Bank is going to have to step in because, ultimately, if the house prices don't slow they're going to have to raise rates and that would be very harmful," he told BBC Radio 5 live's Sunday Breakfast.
"It will increase the value of the pound, it'll reduce dividends, it will raise unemployment and it'll kill the house price off and put people into negative equity so that's really a big concern."It will increase the value of the pound, it'll reduce dividends, it will raise unemployment and it'll kill the house price off and put people into negative equity so that's really a big concern.
"It's a balance that Mark Carney's got to walk and that's why he says it's such a big threat.""It's a balance that Mark Carney's got to walk and that's why he says it's such a big threat."
Housing Minister Kris Hopkins said: "In 2010 we inherited a broken housing market, but our efforts to fix it are working.Housing Minister Kris Hopkins said: "In 2010 we 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 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."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."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.""It's clear evidence the government's long-term economic plan is working."