Britains quick housing economic recovery appears to have cooled down slightly, as morale was at an all time low in 6 months. This is because house prices seem to have gone stagnant. Although the consumer confidence index, produced by market research, was close to a 10 year high it still fell unexpectedly. Mortgage lender Nationwide projected growth figures which were at their weakest in over a year. Read on to learn more on this story:
During this second half of 2014, it’s expected that the economy will slow further. However, The Bank of England suspects that it’ll still outpace all of it’s big European counterparts. This leaves people asking the question, ‘when will interest rates rise?’.
Consumer confidence is at a bit of a low, and it’s no surprise as the interest rates are increasing and the growth of the economy is slowing. However, the chief UK economist at Societe Generale remains optimistic and says that consumer confidence is still at high levels considering the circumstances.
Britain’s economy has finally improved since the pre-crisis peak of 6 years ago. House prices have recently been gaining just 0.1% each month, meaning that it’s as slow as it’s been since 2013.
Britain’s housing shortage will slow down UK growth even more unless supply is increased, according to Britain’s largest supply lobby.
The CBI is said to release a report next month that is going to outline how Britain can build itself up again, from building more houses to creating more jobs.
Britain needs to build more than 24,000 houses per year to keep up with the growing population. The CBI has said it’s been looking for ways to increase building space while seeing to the need for more housing in popular areas. Building houses where there is work is essential, so that is what the CBI aim to do. Let’s hope the estate agents in Kirkintilloch, for example, are prepared for the rise in business!
The CBI are also determined to rubbish the claim that there is a shortage of land to produce these homes on. Although they think that the central government has been good at releasing land for building, the local authorities haven’t done much about it. Only one in seven have plans outlining how they will give enough houses to the area.
That being said; ThinkTank suspect that we are in for a decade of stagnation. Deputy Governor of the Bank Of England, Sir Jon Cuncliffe recently said to the BBC that the housing market is certainly the biggest threat to the current economy. Prices are going up quicker than most wages. This is making it difficult for anybody to afford a home, let alone find one. This could lead to a large rise in debt for the country’s economy.
To stop the housing market from overheating, the Bank of England introduced certain criteria, such as making sure lenders check that applicants can handle a 3% increase in interest, and making sure risky lending is limited. They’ll do this by placing a 15% limit on the amount of mortgages banks can give out to future homeowners who need to borrow 4 and a half times their annual income.
Let’s hope this situation doesn’t get serious anytime soon.