- Miles Shipside, Rightmove director
The latest report from the Rightmove Plc. showed that asking prices in the capital of the U.K. surged to a record high this month, as all of London's capital's boroughs posted increases. Values rocketed 3.3% from April, hitting an average of 592,763 pounds, while across the country prices climbed 3.6%, the most since 2002.
A day before the report was available to public, Mark Carney, the Governor of the Bank of England tried to calm down markets. Carney admitted that the recent economic revival has been supported by soaring house prices in some parts of the nation, but now the emerging bubble may have to be deflated. The Governor warned that the market has "deep, deep" issues that needed to be solved, or otherwise they will pose the bigger risk to the recovery. Amid main challenges he mentioned limited supply and too high demand for property, as well as the return of overly generous lending. In case households borrow more than they can afford themselves, then the debt can be accumulated fast, while interest rates will be pushed higher. The potential tools of cooling the market can be the adjustment of the Help to Buy scheme, while the central bank can also limit the amounts of certain types of mortgages that domestic banks can undertake. While George Osborne will most likely share Carney's concerns, politicians should be as generous as they can be to home buyers in order to be re-elected.
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