Barclays Plc Chief Executive Officer Antony Jenkins said Britain runs the risk of a property boom as the economy starts to recover.
“We are seeing probably a more buoyant housing market for the first time in perhaps as much as a decade,” Jenkins, 52, said yesterday at a conference in New York. “That’s a bit concerning because there is the risk of a property-driven boom in the U.K. The regulators are on it and don’t intend to let it happen, but these things can be difficult to control.”
A U.K. house-price gauge rose to the highest in almost seven years in August as the economic recovery gathered pace and government measures intended to ease the supply of mortgages boosted demand, the Royal Institution of Chartered Surveyors said yesterday. Chancellor of the Exchequer George Osborne this week defended his Help-to-Buy plan amid criticism it may be fueling a bubble in house prices, saying it’s “sensible” and needed to help the market.
Help-to-Buy provides interest-free loans to buyers of newly built properties. From January, the program will give banks guarantees on mortgages for purchasers of both new and existing homes. The policy will allow people to buy a house with a deposit as little 5 percent of the value of the property.
Business Secretary Vince Cable today called on the government to review the second part of Help-to-Buy. In an interview with Sky News, he said policy makers need to avoid a new housing bubble.
“There are people out there -- the Royal Institute of Chartered Surveyors yesterday -- who were warning this was a real risk,” the Liberal Democrat told Sky News. “In London and the south east, in the north east of Scotland, in other areas, there are serious housing inflationary pressures.”
Bank of England Governor Mark Carney promised last month policy makers will act if signs of a property bubble emerge. In an interview with the Daily Mail, he indicated there was a risk of too much stimulus and that it might be a “challenging task” to curb a bubble.
Barclays’s Jenkins said consumers are spending more than a year ago, citing the firm’s data on customers’ purchasing. Even so, they’re shopping for bargains on the Internet and eating out at cheaper restaurants, he said.
“The recovery still feels to me as if it’s beginning,” he said. “The sorts of things you’d expect to fuel economic growth in the U.K. seem to me to be still quite weak. The data is better than people expected, but still not great.”
Barclays, which offers mortgages through its Woolwich brand, slipped 0.1 percent to 305.4 pence as of 2:32 p.m. in London trading today. The stock has risen 16 percent in London trading this year, the second-biggest gainer out of Britain’s five largest lenders after Lloyds Banking Group Plc.