Bubble grows ….Again

Despite the best efforts by the government the spectra of a house price bubble is set to grow as the latest figures by RICS (Royal Institute of Chartered Surveyors) reveals that UK house prices are at an 11 year high.The Royal Institution of Chartered Surveyors’ seasonally adjusted house price balance hit +57, its highest level since June 2002 and up from a revised +53 in September, as demand outstripped the number of properties on the market.According to analysts much of the blame can be attributed to the new incentive schemes introduced by the government in an effort to support people getting on the property ladder.Under this scheme banks were willing to provide home buyers with bigger loans thanks to the latest phase of the Help to Buy scheme in which the government guarantees up to 15% of many mortgages.Couple this to a supply and demand ratio where demand outstrips supply especially in the south east and a dangerous situation is developing warn analysts.

British Chancellor George Osborne has played down suggestions that the housing market risks overheating but has asked the BoE to give annual recommendations on the impact of the Help to Buy programme, starting in September 2014.Prime Minister David Cameron said on Monday that more than 2,000 homebuyers obtained mortgages through the scheme in the first month since the government guarantee was introduced, with most of those first-time buyers. That compared with a total of nearly 67,000 mortgages approved in Britain in September.With Governor Mark Carney of the BOE stating that he does not forsee any interest rate rises till 2016 this bubble could reach previous proportions with the all too familiar fallout…..

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Hetal Patel has written 58 post in this blog.

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