From the BBC:
Mr Carney will say: "When we look at domestic risk, the biggest risk to financial stability and therefore to the durability of the expansion [of the economy] those risks centre in the housing market."
Mr Carney says the fundamental problem was a shortage of homes - and the Bank of England had no solution to that...
He will say in the interview: "There are not sufficient houses built in the UK. To go back to Canada, there are half as many people in Canada as in the UK, twice as many houses are built every year in Canada as in the UK and we can't influence that.
So as a result, there was no house price bubble in Canada..?
From CBC News:
Vancouver ranks second only to Hong Kong in having the least affordable housing, according to Demographia's 10th annual survey of 360 housing markets in nine Western countries.
The survey divided median housing prices in Australia, Canada, Hong Kong, Ireland, Japan, New Zealand, Singapore, the U.K. and the U.S. against median gross household income to come up with its ratings.
Under this rating system, homes in Vancouver cost 10 times median income compared with 15 times income in Hong Kong. Three times median income is considered affordable.
Read the full Demographia report.
Must stop scanning headlines
1 hour ago
12 comments:
"So as a result, there was no house price bubble in Canada..?"
Not while he was in charge there wasn't.
Carney seems to be talking sense in the Brit situation.The Coalition and some commentators -like Larry Elliott- are trying to shift the responsibilty for sorting out the housing mess onto the BoE with rate manipulation etc. As he says the BoE doesn't build houses.He is,rightly, trying to pin the responsibility back on the political parties, which being staunch Homeownerist,are pretending to be worried about lack of housing but are in fact glad that the lack of supply will put house prices up and buy, or not alienate, the Homeowner vote which decides elections. (See Deborah Orr on Property Prices in Saturdays's Guardian: she does everything but use the H word).
Carney has made a pretty clear gesture that he is not going to do their job of economic management.
BTW Vancouver and Brit Columbia are not Canada: This report talks about "Substantial international investor activity"p4 in Vancouver. I believe Chinese. Canadian unaffordability is less (3.9 median income) than the British figure (4.9).
B, oh yes there was. See Garth Turner ad nauseam.
DBC, he's not trying to pin responsibility on anybody, he's trying to says "House price bubbles are like the weather, there is nothing we can do about it".
Nick Clegg was on the Andrew Marr show calling for Carney to give a lead on housing. Carney was saying in the televised news conference that there are deep structural flaws in the British housing market: that is not saying that its like the weather; you cannot say the weather is structurally unsound.
He has said the housing market is a threat to the whole economy and that there is only so much that the BoE can do. Fair enough, surely?
M, I thought he'd left before it all kicked off, but perhaps I was thinking about some other aspect of his legacy.
"in fact glad that the lack of supply will put house prices up"
We don't actually know whether the lack of supply puts up house prices, although it is clear that the opposite is not true, i.e. plentiful supply does not put them down (UK 70's housing boom, Ireland, Spain). It is also clear that there is an inverse correlation between house prices and interest rates and there is also a clear causal mechanism for this. Interest rates are something that the BoE has control over and the gov't doesn't. The fact that nearly everyone seems to believe that high house prices are caused by lack of supply doesn't make it true, any more than the once widely held belief that the world was flat.
I think that Carney is a numpty (less mark Carney - more Fred Karno). He's been doing QE and keeping interest rates at 0.5% - i.e. effectively negative - at the same time as the gummint has been doing subsidy and rationing supply. Really, you couldn't make it up could you? Apropos of that didn't I read somewhere that the actual ratio of people to houses hasn't changed much in recent years and so there isn't really a supply problem?
@l
Carney may be a numpty but look at the competition: Cameron stuck with the "Economy's nothing to do with me mate" line by saying "We have given the Bank of England the duty to make sure that bubbles are dealt with in the economy" Guardian p2 today.But the bank does n't have the power to do anything about land price/house price bubbles because these are best dealt with by taxation ( we all know which tax ).The bank can only put up interest rates which would kibosh the industrial recovery and put the overmortgaged masses out of their homes. Obviously Carney does n't want to be blamed for doing that, just to help the prat politicos dodge the column.
@DBC Well, quite. But I do no think that an increase interest rates would kill of production. It might kill off marginal businesses but not those that are genuinely profitable.
"The bank can only put up interest rates which would kibosh the industrial recovery and put the overmortgaged masses out of their homes. Obviously Carney doesn't want to be blamed for doing that"
Well quite, but that's not what he said, was it?
"BTW Vancouver and Brit Columbia are not Canada: This report talks about "Substantial international investor activity"p4 in Vancouver."
Like London vs the rest of the UK.
Come to think of it, the gov't has the best of both worlds. There isn't really a house price bubble outside London, but London's bubble means that the gov't can benefit from the feelgood factor of rising (average) house prices without actually having rising unaffordability anywhere except politically unimportant London. So it's all just posturing.
Bayard @ 18.04. Yeah. Clever innit.
Norman Smith just said on BBC News at one o'clock that the government had passed the house price inflation problem over to Carney. He called it "a hospital pass" given the trouble he'd be in if he did anything: crash the recovery or outrage the voters.
Post a Comment