In a very interesting development in relation to the UK property market the Governor of the Bank of England, Mark Carney, has today suggested that he is happy with the current buoyancy of the UK property market. Amid suggestions that activity in the UK wide property market is some 30% below the levels seen just prior to the recession there were some other interesting comments about regional property markets.
There is no doubt that regional UK property markets are performing very differently with London again leading the way and the south of England very much to the fore. A recent survey confirmed that property prices in the north-east of England have remained relatively flat over October against an average 0.5% increase UK wide. So what can the Bank of England do to balance UK regional economies?
Time and time again Mark Carney has confirmed that the UK is moving out of recession and this increase in economic activity is being led by the housing market. This is no secret, this happens time and time again but the very different performance across the UK property market as a whole is starting to alarm many people.
It is worth noting that some micro-property markets within London have seen prices moving towards and in some cases ahead of the all-time highs seen prior to the recession in 2008. This is an unbelievable situation when you bear in mind the troubles of the worldwide economy in recent times and indeed the fact that the UK economy is not yet out of the woods. What does Mark Carney have in mind to balance economic prosperity across the UK?
Quote from PropertyForum.com : “Despite the pessimists suggesting that the UK housing market is approaching “price bubble” time it seems that confidence in the UK market has never been higher.”
Access to property finance
Mark Carney has very bravely suggested that the Bank of England would not be against placing pressure upon banks and building societies in areas of the UK where perhaps property prices are “overheating”. This will apparently be done without shifting broad monetary policy and would to all intents and purposes be something of a nudge and a wink to those in the industry. Whether this is feasible on a regional basis is debatable, whether it may impact regional investor confidence is also an issue but is this really what the UK property market needs?
If you take a step back, look at the situation and the fact that the UK property market is very different in regions of the country then perhaps this “revolutionary” strategy announced by Mark Carney could be just the ticket?
Making investors think
On the flip side of the coin this could be a very innovative although potentially high risk policy by the Bank of England to make investors think before investing in regional property markets where prices have perhaps pushed too far ahead in the short term. If today’s announcement was to make investors think again about chasing “hot properties” surely this is what the Bank of England is all about?
It will be interesting to see how the new “strategy” pans out in the short to medium term and indeed whether the Bank of England and Mark Carney in particular are good to their word. During his relatively short time in office Mark Carney has shown a willingness to take on the investment markets and while some investors have tried to “call his bluff”, so far his reputation remains intact and indeed if anything has been strengthened. Have the quick buck investors of the UK property market finally met their match?