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House prices seem manageable outside London

A recent survey by Nationwide has suggested that monthly increases in house prices outside the capital may not be a threat to the national economic recovery.

Howard Archer, an economist who works for IHS Global Insight, has said:

“It is certainly justifiable to talk of a house price bubble in London (where Nationwide data show that prices jumped 5.3 per cent quarter-on-quarter and 18.2 per cent year-on-year in the first quarter) – but the strength of house prices is not yet a serious problem outside of the capital.”

Nonetheless, Archer continued to say that there is a possibility of a larger property bubble developing in the future. This is because of his interpretation of relevant survey evidence.

However, Melanie Bowler, who works for Moody’s Analytics, has suggested that the central bank will step in if action is required. Furthermore, she has highlighted various options that exist.

It seems that the housing market can be controlled if policymakers are responsive to changing circumstances. This is reassuring news to people with mortgages across the UK. Services like carpet cleaning in Liverpool will be in considerable demand as the economic recovery evolves.

When it comes to particular measures, the Bank might ask the Government to change its position on supporting mortgage lending. However, new rules around mortgage lending might yet have an impact and a major switch may not be required. Lloyds declared that it would alter its mortgage lending conditions back in May. The bank now expects mortgage applicants for expensive properties to have incomes that make the loans less risky.

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