The Bank of England has warned that the housing market could pose a risk to the UK’s financial stability.
It has also expressed concern about buy-to-let activity.
In its financial stability report, the BoE says that following the Brexit vote: “The current outlook for UK financial stability is challenging. There will be a period of uncertainty and adjustment.”
It adds that it is hard to judge the current health of the housing market because of the distortion caused by the buying stampede before the Stamp Duty hike on second homes which hit on April 1.
However, the report cites the RICS’s survey which said that in May, the market slowed sharply with new buyer inquiries at their lowest since 2008.
The BoE also says buy-to-let landlords are a concern because they could “behave procyclically, amplifying movements in the housing market”.
The Bank says it will keep monitoring the behaviour of buy-to-let investors to protect against future economic shocks.
Comments (4)
The run on investors trying to liquidize funds tied up in commercial property has caused some funds to shut the door……the dependence on overseas money (much of it pan European pension money) to prop up the funds, might well be a macroscopic indicator of how the microscopic LLs might be thinking of behaving……. I am old enough to remember previous residential quakes that have been forewarned by seismic activity in the commercial market. There will be winners and losers in the post Brexit marketplace…. I just hope that I can position my business on the right side of the fault line!
Every time the story pops up with doom and gloom about the housing market I am somewhat dismayed. Is this story about property selling or the ability for builders or lenders to raise finance and mortgages? As far as selling is concerned there is a demand that outstrips supply and will continue to grow year on year. That will not bring down the housing market. As for BTL that is in the main linked to demand for those that cannot afford to buy and this is where Osbourne stuffed Landlords which they will never forget and has nothing to do with Brexit. If the banks don’t provide finance to builders or able to raise funds for lending that is another matter.
So basically because landlords have the ability to act in unpredictable ways. We don’t like them.
Furthermore as a direct result of the chancellors decision to play politics with BTL stamp duty they have no idea what is going on in the housing markets.
Is this flowing out of the B o E in slow motion? Mr O gave the B2L sector a good kicking already this year. What do they want to happen? Make it an imprisonable offence to own a second property that you let to someone?