Concern over unsustainable housing

The Bank of England is under pressure over the current state of the housing market, according to the results of its most recent Systemic Risk Survey of leading executives in financial services.

Looking at the key risks to the UK financial system, the risk of property price falls continued to rise for the third bi-annual survey in succession. The poll surveyed the opinions of 72 companies including hedge funds, banks and asset managers.

Even the implementation of the Mortgage Market Review (MMR) and a fall in the number of mortgages approved has not stopped the continued acceleration of house prices.

Data published by Nationwide in June showed house prices climbed again in May, rising for the 13th month in a row, and going up 0.7 per cent on April’s figures. The BoE statistics, published two days before Nationwide’s, showed mortgage approvals fell in April, the third consecutive month.

But it is not just Help to Buy that is encouraging high house prices - Nationwide data showed that it only accounted for 9 per cent of all mortgage completions between January and March.

Daniel Bailey, owner of Derbyshire-based Middleton Finance, believes these problems are not pronounced anywhere but London. “I think it’s a concern with the London property markets, but it’s difficult to say what anyone can do because from my experience, it’s mostly overseas cash buyers and I don’t know how you could deter them.

“I work in the Peak District and things are starting to move but it’s nothing like what’s happening in London and the southeast. It’s almost like you’ve got to have two sets of rules because they’re two different markets,” he said.