Almost half of 29 experts polled by Reuters, including economists working for major banks and research institutions, put the chances of another sharp rise in prices at either likely or very likely. Seven described the risk as 50-50.
Respondents said the pick-up in Britain’s housing market, accelerated by the government’s ‘Help to Buy’ programme introduced in the Budget, was a positive, but that it could mean the UK again has to face the potential consequences of a rapid increase in prices last seen following the housing boom of 1997-2007.
Only nine of the economists surveyed said the prospect of another bubble – whereby prices rise so fast they would be vulnerable to a sharp correction – is small.
Chancellor George Osborne recently dismissed the risk of another bubble. “I don’t think in the current environment [that one] is going to emerge in 18 months or three years,” he told parliament.
Despite those concerns, there was a clear consensus that the recent improvement in data heralds a sustainable economic recovery for the UK.
The Reuters poll suggested the UK economy is likely to improve further from here over the next 18 months at least. Respondents said GDP could grow by between 0.4% and 0.5% per quarter from here through to the end of next year.
