BRITAIN’S housing market is like food in a microwave, says Spencer Dale, the chief economist at the Bank of England.
Last year house prices were predominately rising in central London and surrounding boroughs, however this year we are seeing and explosive increase in value and price throughout the U.K.
In 2014, prices have rose by 7.3% according to the office of National Statistics. These higher prices are a problem for first-time buyers, but they are not yet unsustainable. Nationally, house prices remain 16% below their pre-crisis peak, adjusted for inflation. Prices are high relative to wages, but that is not surprising
Even so the housing market is notoriously prone to bubbles. At the end of 2013, the average new loan for first-time buyers was 3.4 times the borrower’s income—the highest level on record. From April 26th banks will have to check that applicants have enough spare cash to cope if the Bank of England raises interest rates as markets expect (to around 3% in 2019)