OECD Warns UK Faces Housing Bubble

OECD WarnsUK Faces HousingBubble

The U.K. faces a housing-market bubble unless the government boosts the supply of new homes, the OECD warned yesterday. U.K. homevalueshaveclimbed 36.6% since 2004, theseventh-biggestriseamong OECD nationsandbackneartheir 2007/8 bubblehighs. The Bank of England said last week mortgage approvals had surpassed 60,000-a-month six months earlier than it had predicted. As Bloomberg’s Niraj Shah notes, while the OECD raised its forecasts for U.K. economic growth, it said riskstotherecoveryinclude “vigorous” house-priceincreasesthatmaycurtailaffordability. We are sure this will all end well – a speculative real estate bubble as the key driver of nominal economic growth? What could go wrong?… Is it any wonder that UKrealtorsseethecrashcoming and are askingthegovernmenttostepbackfromthispolicyinducedeuphoria?

Chart: Bloomberg

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