David Miles, one of the Bank’s nine rate-setters, said in an official paper that the desire for space caused by the UK’s rising population would reinforce planning restrictions and make it more difficult for housebuilders to keep up with demand. As a result, he said: “We should anticipate a rising trajectory for real house prices over the longer term.
“This is particularly likely in a country like the UK where population density looks set to rise relatively fast. The model also suggests that the upwards trajectory in house values may ultimately become steeper than the rise in real incomes.”
However, a housing boom would be out of reach for first time buyers, he added, because credit will remain in short supply. Before the financial crisis, buyers did not need a deposit to secure a mortgage. Since the recession, though, large deposits have become essential.
“It should not be seen as a sign of a damaged market,” Mr Miles said. “It probably never made sense for there to be 100pc mortgages. There may be no price at which it makes commercial sense for such a loan to be available.”
He added: “New homeowners in the future may need to have more equity than was normal in the years leading up to the financial crisis. This will have an impact, probably permanently, on the pattern of home‐ownership.
Source: House prices to rise for years, says BoE's David Miles - Telegraph
“This is particularly likely in a country like the UK where population density looks set to rise relatively fast. The model also suggests that the upwards trajectory in house values may ultimately become steeper than the rise in real incomes.”
However, a housing boom would be out of reach for first time buyers, he added, because credit will remain in short supply. Before the financial crisis, buyers did not need a deposit to secure a mortgage. Since the recession, though, large deposits have become essential.
“It should not be seen as a sign of a damaged market,” Mr Miles said. “It probably never made sense for there to be 100pc mortgages. There may be no price at which it makes commercial sense for such a loan to be available.”
He added: “New homeowners in the future may need to have more equity than was normal in the years leading up to the financial crisis. This will have an impact, probably permanently, on the pattern of home‐ownership.
Source: House prices to rise for years, says BoE's David Miles - Telegraph
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