UK housing boom could continue after Covid leaving more buyers unable to get mortgages
Britain’s Covid housing boom could continue even after tax breaks are withdrawn, leaving more buyers unable to get a mortgage, a senior Bank of England official warned.
House prices are rising at more than 10 per cent a year – the fastest rate since 2007 before the last financial crisis – amid strong demand for bigger homes.
Prices have also been driven higher by temporary cuts to stamp duty.
Property boom: House prices are rising at more than 10 per cent a year – the fastest rate since 2007 before the last financial crisis – amid strong demand for bigger homes
Sir Jon Cunliffe, a deputy governor at the Bank, said ‘one would expect the market to cool down when public support to the economy in general and the housing market in particular is withdrawn over the course of the year’.
But he added that this might not be the case. ‘There may be some reasons to believe that the recent increase in demand for housing, which has driven the UK market in recent months reflects some more persistent drivers and that the market will not fall back to its pre-pandemic decade performance when the tax incentives have gone,’ he said.
He pointed to ‘a clear shift in attitudes towards remote working as a result of the pandemic’ – boosting demand for larger homes ‘with less weight attached to considerations around commuting times’.
He added: ‘Remote working considerations would point to a shift away from urban areas like London and towards suburban areas and further out.’