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Managing Housing Market Risks in the United Kingdom
House prices are rising rapidly in the UK at an annual rate of 10.5 percent. House price inflation is particularly high in London (20 percent per year), and it is gradually accelerating in the rest of the country. The recent increases in house prices have been getting a lot of attention, and understandably have raised questions about living standards and whether another “boom-bust” cycle has begun. The current UK housing cycle raises two important questions. What is driving the rise in house prices? And how should macroeconomic policies respond? Macroeconomic policies should tackle two crucial issues in the ... (full story)