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FPC seeks to overhaul ‘imperfect’ housing data

by: Samantha Partington
  • 15/07/2014
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FPC seeks to overhaul ‘imperfect’ housing data
The Financial Policy Committee (FPC) has stated it is working on a project to improve the quality of housing data after describing the available information as ‘imperfect'.

Martin Taylor, external member of the FPC, told the Treasury Select Committee (TSC) that sample data from RICS, Halifax and Nationwide frequently contradict each other.

He added that more precise data which came from the tax authorities carried a considerable lag which eroded its usefulness.

“Trying to pick out precise trends, what has been happening over the last four to six weeks for example, is very difficult,” said Taylor.

When asked by a member of the TSC if he was ‘happy’ there was sufficient information for the Bank to rely on he replied, ‘I wouldn’t say that I was happy’.

He added that it had become an important issue for the FPC over the last several months.

The FPC and MPC both want to get a better understanding of credit constrained households.

Mark Carney said the Bank wanted to collect ‘more granular data’ which tied together house price dynamics, debt and income ratios at a post code level.

He said: “Our focus [..] has been around indebtedness and cohorts of highly indebted individuals and understanding their reactions to different rate environments, different macro-economic environments, [finding out] where are the tipping points.”

Carney said being able to track the ‘ripple effect’ of major shocks to the economy was ‘important’.

He said the fledging stress test which forces banks to prepare for a ‘housing market shock‘, which includes a 35% drop in house prices, an eight-fold rise in interest rates and unemployment at a rate of 12%, was a useful source of information.

Other institutions have recently taken the decision to collect and publish data of a more granular nature.

This month the Council of Mortgage Lenders compiled and released mortgage lending data broken down into 27 postcode sectors. The data was collected from the UK’s biggest mortgage lenders covering 72% of the market.

 

 

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