The property dream will remain just a dream for many
Richard Edgar
Former Economics Editor
Buying your own home in the area where you currently live is beyond the reach of half the people in Britain. ITV News conducted a poll across the country and found that the booming housing market, with prices rising ten per cent a year, means the property dream will remain just that for many.
That matters because people like Alistair, an electrician in Lincoln, want to stay where their friends, family and customers are. Moving away to an area with cheaper housing is not an option. And house prices in Lincoln are hardly rocketing either - a steady 3% rise last year to around £149,000 according to Nationwide.
But are we in a housing bubble nationally? That¹s generally understood to be when people pile in to an asset not because they need it but because they expect its value to continue rising.
The Bank of England thinks not.
Today its Financial Policy Committee which is charged with maintaining financial stability across Britain has elected not to act to cool the market.
In a statement it recognised "continued evidence of increasing momentum" as 40% more mortgages were approved compared with the previous year, prices rose strongly and the number of new mortgages at more than four times the borrower's income rose to record levels.
Yet the Bank remains unconcerned. It says that these measures (apart from high loan-to-income) are still running below historical averages. For now it is content to remain "vigilant to emerging vulnerabilities" and says that it could act with new powers from June.
These would involve giving 'guidance' to lenders on tests that they must apply to borrowers to ensure they could afford the mortgage if interest rates were to rise - as indeed many people expect them to sometime next year. This could have the effect of cooling the market by making mortgages harder to get.
But clues that there might be a bubble in the housing market are growing.
We filmed at an 'open house' in London this weekend where a dozen buyers filed through in less than an hour - something that¹s becoming common practice in the capital alongside 'sealed bids' where all the buyers are asked to make their 'best and final' offers for a property, often way above the asking price. Is this reckless behaviour? The Bank wants to wait and see.
The people who have told us they can no longer afford a house where they want to live have no time to wait for the answer.