Surging house prices could pose a danger to the country's financial stability as it continues its recovery, the Bank of England has warned.
In a hint that further steps could be taken to cool the market, the bank's deputy governor for financial stability, Sir Jon Cunliffe, warned: "It would be dangerous to ignore the momentum that has built up in the UK housing market."
He highlighted the fact that there are several UK precedents for house price booms which have ended in a crash. The warnings came in a week of strong housing market figures, including building society Nationwide reporting that annual house price growth is back in double digits for the first time in four years and Land Registry data showing that around one in 13 homes in London are now selling for over £1 million. However, Simon Rettie, managing director of Rettie & Co contrasted that with the situation in Scotland, where prices have grown slower.
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Registers of Scotland figures released last week show that the annual house price has grown by 3.5 per cent in the last 12 months to stand at £153,352.
Mr Rettie said: "In Scotland we're still getting back to pre-crash levels, and some areas have not even reached that yet. We are a long way behind the market in London and the south of England ."
He added: "In Edinburgh and Glasgow the market is performing much better with some properties achieving their full home report value or better, although rural property lags behind."