Risk of UK housing bubble ‘extremely slim’

<p>The risk of a housing bubble in the UK has been downplayed.</p>

The EY Item Club has moved to downplay concerns the UK could be heading for a new housing bubble in the coming weeks and months.

In its quarterly report on the economy, the body argued that even though house prices will rise by 3.5 per cent in 2013 and 6.6 per cent next year, this will not lead to the creation of a new bubble.

Peter Spencer, the Item Club's chief economic adviser, praised government initiatives such as the Help to Buy scheme for the impact they have had on the market.

"Despite the recent criticism of these initiatives, the chances of seeing another housing market bubble are extremely slim," he said.

Mr Spencer added that house prices and transactions are only now starting to recover from the credit crunch and will take some time to get back to pre-recession levels.

Chancellor of the exchequer George Osborne, speaking at the annual meeting of the Institute of Directors in London last month, denied that the UK is heading for a house price bubble.

Find up to date information on the FTSE 100 and spread betting strategies at City Index

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.