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BoE: Housing market poses biggest risk to economy

Staff writer |
The Bank of England's deputy governor Jon Cunliffe said that the housing market poses the biggest risk to British economy, as the soaring price is adding debt to households.

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Speaking to BBC Radio, Mr. Cunliffe said that houses prices are rising faster than people's incomes, "that leads to a big increase in the amount of debt in the economy."

British house prices increased by one percent month-to-month in June and were 11.9 percent higher than June 2013, data showed by Nationwide Building Society Wednesday.

London continued to outperform last month, with prices up by approximately 26 percent in the second quarter compared to the same period of 2013, data also showed.

Mr. Cunliffe said:" Some months ago I thought the biggest risk at that point came from the housing market in Britain. And it's not the risk around house prices as such, it's the risk that we get sustained rise in house prices, and this is very important. The house prices (are) rising faster than people's incomes."

"House prices have been growing strongly in the country as a whole for the last year. The momentum is there, the growth is there. The risk here is that if that continues to happen, and if the only way people can afford to buy houses is to buy with mortgages that are more and more times their income, then we get this debt risk."

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