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Construction workers construct a new house in Aylesbury, Britain August 6, 2020. REUTERS / Matthew Childs
The UK housing market is “on fire” thanks to government incentives for buyers, increased demand from households with higher savings after COVID closings and the lack of homes for sale, the chief economist of the Bank of England, Andy Haldane.
“As it stands, the UK housing market is on fire,” Haldane said in remarks at an inequality webinar hosted by the University of Glasgow on Tuesday.
The recent rise in house prices – which topped 10% for the 12 months to March, according to official data – was very likely to worsen existing wealth inequalities, Haldane said.
UK Finance Minister Rishi Sunak cut stamp duty on property purchases last year in an attempt to reverse the drop in property sales at the start of the pandemic, and extended the temporary tax cut in the budget Of March.
The tax incentive came just as many people who worked more from home looked for larger properties.
Haldane said there was little the BoE could do about soaring housing prices and demand, as tax rates, planning rules and measures to promote housing construction were set by the government. government.
Last month, BoE Deputy Governor Dave Ramsden said the central bank was closely monitoring the housing market as it assessed the risk of rising consumer price inflation.
Haldane told Tuesday’s seminar that uncertainty over the outlook for the UK labor market remains high even as employment and vacancies rebounded quickly after the COVID crisis.
“We still have over 3 million workers on leave across the UK, which means that uncertainties about the future labor market remain quite acute,” he said.
While last week’s government figures showed 3.4 million jobs were on leave at the end of April, more recent survey data from the Office for National Statistics suggests the number has fallen to 2, 1 million in mid-May.
Haldane also said the increase in working from home after the pandemic could have significant implications for the job market, productivity and inequality.
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