George Osborne has conceded that the housing market remains a threat to the recovery following comments by the International Monetary Fund (IMF) in its appraisal of the UK economy.
Hours before the IMF chief, Christine Lagarde, will present the fund's annual assessment, the chancellor said he agreed with her conclusion that the UK must keep a close eye on rising house prices and indebtedness.
Speaking on BBC Radio, Osborne said: "I agree with Christine Lagarde that we need to be alert to the build-up of debt in the housing market. We need to be alert when we see house prices rising.
"I have given the Bank of England tools to do the job, and they should not hesitate to use those tools if they see these developments turning into a risk to the British economy."
Osborne's comments will dismay the IMF, which traditionally keeps its report under wraps until Lagarde has presented the findings, due to take place later on Friday morning. The IMF has voiced concern in the past over the UK's path out of recession.
Earlier this year its chief economist, Olivier Blanchard, said that while growth had rebounded more strongly than anticipated on easier credit conditions and increased confidence, "the recovery has been unbalanced, with business investment and exports still disappointing".
The booming housing market has become a source of concern for most economists. Prices have rocketed in London and the south-east with other hotspots around the country.
Earlier this week Nationwide reported a 13th consecutive month of house price rises, sending the cost of an average UK home to £186,512 – more than the previous peak reached in October 2007 before the financial crisis swept in and the overall housing market started to go into freefall.
The Bank of England has expressed concern and has already urged regulators to be vigilant about homebuyers stretching their finances.
Treasury officials are understood to be confident that restrictions on home loans will cool the market over the coming months without the need for a hike in interest rates.
The Nationwide figures showed a slowing of price rises at 0.7%, lower than the 1.2% recorded in April.
Also the building society's three-month growth figure, which gives a less volatile picture of the market than month-on-month comparisons, also fell, from 2.5% in April to 2.3% in May. That brought it to the lowest level since August 2013.
theguardian.com
Hours before the IMF chief, Christine Lagarde, will present the fund's annual assessment, the chancellor said he agreed with her conclusion that the UK must keep a close eye on rising house prices and indebtedness.
Speaking on BBC Radio, Osborne said: "I agree with Christine Lagarde that we need to be alert to the build-up of debt in the housing market. We need to be alert when we see house prices rising.
"I have given the Bank of England tools to do the job, and they should not hesitate to use those tools if they see these developments turning into a risk to the British economy."
Osborne's comments will dismay the IMF, which traditionally keeps its report under wraps until Lagarde has presented the findings, due to take place later on Friday morning. The IMF has voiced concern in the past over the UK's path out of recession.
Earlier this year its chief economist, Olivier Blanchard, said that while growth had rebounded more strongly than anticipated on easier credit conditions and increased confidence, "the recovery has been unbalanced, with business investment and exports still disappointing".
The booming housing market has become a source of concern for most economists. Prices have rocketed in London and the south-east with other hotspots around the country.
Earlier this week Nationwide reported a 13th consecutive month of house price rises, sending the cost of an average UK home to £186,512 – more than the previous peak reached in October 2007 before the financial crisis swept in and the overall housing market started to go into freefall.
The Bank of England has expressed concern and has already urged regulators to be vigilant about homebuyers stretching their finances.
Treasury officials are understood to be confident that restrictions on home loans will cool the market over the coming months without the need for a hike in interest rates.
The Nationwide figures showed a slowing of price rises at 0.7%, lower than the 1.2% recorded in April.
Also the building society's three-month growth figure, which gives a less volatile picture of the market than month-on-month comparisons, also fell, from 2.5% in April to 2.3% in May. That brought it to the lowest level since August 2013.
theguardian.com
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