Annual house price growth should be limited to 5%, argues the RICS today. Specific policy on this would, says the Institute, prevent another housing bubble, put paid to reckless bank lending and stop a dangerous build up in household debt.
This advice comes just a day after Savills revealed that, from 1979 to now, the UK’s average annual property price increase has been just 2.9%. In prime central London, the nation’s top-performing area, average prices have risen by 4.9% a year since 1979. The last eight years have, however, been a rather different story: PCL has shot up by 116% in that time (14.5% p.a.).
A house price limiter could – according to RICS – be implemented by the Bank of England’s Financial Policy Committee with caps on elements such as loan-to-value ratios, loan-to-income ratios, and mortgage durations, or imposing ceilings on the amount banks are permitted to lend, should prices exceed a given limit.