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| Version 1 | Version 2 |
|---|---|
| Sir Jon Cunliffe: House prices 'biggest risk' to UK economy | Sir Jon Cunliffe: House prices 'biggest risk' to UK economy |
| (about 7 hours later) | |
| Bank of England deputy governor Sir Jon Cunliffe has told the BBC that the housing market poses the "biggest risk" to the UK economy. | Bank of England deputy governor Sir Jon Cunliffe has told the BBC that the housing market poses the "biggest risk" to the UK economy. |
| Sir Jon indentified "prices rising faster than people's incomes" as a particular threat. | Sir Jon indentified "prices rising faster than people's incomes" as a particular threat. |
| "That leads to... a big increase in the amount of debt in the economy," he added. | "That leads to... a big increase in the amount of debt in the economy," he added. |
| Last week, the Bank of England announced measures to try to prevent the housing market overheating. | Last week, the Bank of England announced measures to try to prevent the housing market overheating. |
| These included: | These included: |
| 'Sustained rise' | 'Sustained rise' |
| Sir Jon, who is the Bank's deputy governor for financial stability, said a "sustained rise" in house prices would be of concern. | Sir Jon, who is the Bank's deputy governor for financial stability, said a "sustained rise" in house prices would be of concern. |
| "Some months ago I thought the biggest risk at that point came from the UK housing market in Britain," he told BBC Radio 5 Live. | "Some months ago I thought the biggest risk at that point came from the UK housing market in Britain," he told BBC Radio 5 Live. |
| "And it's not the risk around house prices as such, it's the risk that we get a sustained rise in house prices - and this is very important - (the risk of) house prices rising faster than people's incomes. | "And it's not the risk around house prices as such, it's the risk that we get a sustained rise in house prices - and this is very important - (the risk of) house prices rising faster than people's incomes. |
| "That leads to the sustained increase, a big increase in the amount of debt in the economy, in the amount of debt that mortgage holders have." | "That leads to the sustained increase, a big increase in the amount of debt in the economy, in the amount of debt that mortgage holders have." |
| On Wednesday, the Nationwide building society reported that UK house prices had risen above their 2007 peak, with the average value of a UK property climbing to £188,903, and surpassing £400,000 in London for the first time. | On Wednesday, the Nationwide building society reported that UK house prices had risen above their 2007 peak, with the average value of a UK property climbing to £188,903, and surpassing £400,000 in London for the first time. |
| Last month, the International Monetary Fund (IMF) warned the government that accelerating house prices were the greatest threat to the UK's economic recovery. | Last month, the International Monetary Fund (IMF) warned the government that accelerating house prices were the greatest threat to the UK's economic recovery. |
| It said rising property values could leave households more vulnerable to income and interest rate shocks, and called on the Bank of England to enact policy measures "early and gradually" to avoid a housing bubble. | It said rising property values could leave households more vulnerable to income and interest rate shocks, and called on the Bank of England to enact policy measures "early and gradually" to avoid a housing bubble. |
| Mark Carney, the governor of the Bank of England, has also previously warned that the rapid rise in property prices could be detrimental to the UK's economic stability. | Mark Carney, the governor of the Bank of England, has also previously warned that the rapid rise in property prices could be detrimental to the UK's economic stability. |
| He has emphasised the need to bolster banks, so that they hold enough capital to reduce the risk presented by the housing market. | He has emphasised the need to bolster banks, so that they hold enough capital to reduce the risk presented by the housing market. |