London Daily

Focus on the big picture.
Monday, Mar 09, 2026

UK housing market is on fire, warns Bank of England chief economist

UK housing market is on fire, warns Bank of England chief economist

Continued rise stoked by tax breaks and demand from well-off households likely to deepen inequality, says Andy Haldane

Britain’s housing market is “on fire” thanks to the extension of government tax breaks for homebuyers and increased demand from richer households with more savings following coronavirus lockdowns, the Bank of England’s chief economist said on Tuesday.

Andy Haldane warned that the property market was likely to continue running hot while all these factors, in combination with the central bank’s ultra-low interest rates, remained in place. He said the recent rise in house prices – which topped 10% over the 12 months to March 2021, according to official data – was very likely to worsen inequality.

“As things stand, the housing market in the UK is on fire,” Haldane said at a virtual conference on inequality organised by the University of Glasgow. “There’s a significant imbalance between incipient demand and available supply of houses, and because the laws of economic gravity have not been suspended, the result is pretty punchy rises in house prices.”

Bank of England chief economist Andy Haldane.


Haldane said the dramatic increase in prices was very likely to worsen the gap in wealth between the better off and younger generations.

Unless policymakers tackle the supply of homes, Haldane said, “inevitably we’ll see the sort of relentless rise in house prices relative to incomes that we’ve seen over the past 30 to 40 years”.

“For most people the global financial crisis came like an earthquake exposing those structural fault lines in our societies, of which inequality is among the largest.”

The chancellor, Rishi Sunak, has come under fire for pushing the cost of homes out of reach for middle-income groups after he cut the stamp duty tax on property purchases last year. The move reversed a slump in property sales at the start of the pandemic. He extended the temporary tax cut in March’s budget to the end of June 2021.

Households, many of them with people working from home, have built up around £160bn in savings since the start of the pandemic. Sunak’s tax incentive came as many of them sought bigger properties to include gardens and home offices.

Halifax said this week that house prices are likely to continue rising for some time despite hitting a new record high in May.

The mortgage lender, part of Lloyds bank, said house prices jumped 1.3% in May, and by 9.5% over the last year, taking the average selling price to a record £261,743.

Haldane, who is leaving the bank to head the Royal Society of Encouragement of Arts and Manufactures and Commerce, said there was little the central bank could do about the surge in house prices because the main influences on the housing market – tax rates, planning rules and measures to promote housebuilding – were set by government.

His comments contrast with deputy governor Sir John Cunliffe who said last month that the bank’s role as watchdog for the banking industry meant it was making sure lenders were conservative in their policies.

In a separate speech, deputy governor Dave Ramsden said the central bank was carefully monitoring the housing market as it weighed up the risk of a jump in consumer price inflation.

Haldane told the workshop that uncertainty about the prospects for Britain’s labour market remained high even though employment and vacancies had bounced back quickly from the Covid crisis.

“We’ve still got more than 3 million workers on furlough across the UK, and that means that uncertainties about the future jobs market remain pretty acute,” he said.

While government figures last week showed 3.4m jobs were on furlough at the end of April, more timely survey data from the Office for National Statistics suggested the number had dropped to 2.1 million by mid-May.

Newsletter

Related Articles

0:00
0:00
Close
Trump Declines UK Offer to Deploy Aircraft Carriers to Middle East Amid Iran Conflict
Prince Harry and Meghan Markle to Return to Australia After Seven Years for Philanthropic and Business Engagements
UK Government Signals Independence From Washington as Cooper Says Britain Does Not Agree With Trump on Every Issue
UK Experts Warn AI Chatbots Are Fueling Surge in Claims of Organised ‘Satanic’ Ritual Abuse
UK Political Parties Divided Over Strategy as Iran Conflict Reshapes Foreign Policy Debate
Britain Discloses Secret Military Repair Hubs Operating Inside Ukraine
Trump Says US No Longer Needs UK Carrier Support After Delayed Offer Amid Iran Conflict
Why Britain Has Become Involved in the US-Israel Military Campaign Against Iran
UK Gas Storage Falls to Under Two Days as Iran Conflict Jolts Global Energy Markets
UK Warned to Brace for Economic Shock as Iran War Drives Global Energy Price Surge
Starmer and Trump Hold First Call After Public Dispute Over Iran Conflict
UK Dentists Returned £1.3 Billion to Government as Shift Toward Private Care Accelerates
Expert Warns UK Must Build Emergency Food Stockpiles to Prepare for Climate Shocks or War
UK Plans Charter Flight to Evacuate British Nationals from Gulf as Regional Conflict Disrupts Air Travel
Families of Zimbabwe’s Liberation Fighters Call on Britain to Help Locate Skulls Taken During Colonial War
Iran’s Ambassador Warns Britain to ‘Be Very Careful’ Over Deeper Role in Expanding Middle East War
UK Military Leadership Defends Britain’s Defensive Role in Expanding Middle East Conflict
Four U.S. Strategic Bombers Arrive in Britain as Iran War Intensifies
Soham Murderer Ian Huntley Dies After Violent Attack in High-Security Prison
UK Lawmakers and Experts Condemn Scale of Overseas Human Remains Held in British Museums
Royal Navy Aircraft Carrier HMS Prince of Wales Placed on Standby for Potential Deployment
United Kingdom Confirms U.S. Military Using British Bases for Operations Targeting Iranian Missile Sites
Starmer Defends UK Role in Iran Conflict After Renewed Criticism from President Trump
Blue Owl Reveals £36 Million Exposure After Collapse of UK Lender Serving Wealthy Clients
UK Asylum Reform Plan Triggers Fierce Debate Over Border Control and Humanitarian Impact
US Stealth Bombers Head to UK Base as Trump Issues Stark Warning to Iran
UK Deputy Prime Minister Says Legal Case Could Exist for British Strikes on Iranian Missile Sites
Investigators Link Mysterious Parcel Fires Across Europe to Russian Intelligence Operation
Debate Intensifies Over Britain’s Legal Justification for US Military Operations Launched From UK Bases
Britain Faces Heightened Energy Price Risks as Iran-Linked Tensions Threaten Global Oil and Gas Supplies
British Counter-Terror Police Arrest Four Suspected of Spying on Jewish Community for Iran
Axel Springer Agrees $770 Million Deal to Acquire Britain’s Daily Telegraph
Iceland Supermarket Drops Trademark Challenge Against Icelandic Government in Long-Running Naming Dispute
UK Defence Secretary Visits Cyprus Following Scrutiny of Britain’s Response to Drone Attacks
Questions Grow Over Britain’s Military Readiness as Response to Iran Conflict Draws Scrutiny
UK Offers Failed Asylum Seeker Families Up to Forty Thousand Pounds to Leave Voluntarily
Saharan Dust Could Bring ‘Blood Rain’ to Parts of the UK as Weather Systems Shift
UK Deploys Additional Typhoon Fighter Jets to Qatar and Helicopters to Cyprus Amid Rising Middle East Tensions
Experts Urge Britain to Accelerate Renewable Energy Push as Global Conflicts Drive Up Costs
British Public Shows Strong Reluctance to Join Wider War in Iran
First UK Evacuation Flight Departs Middle East After Lengthy Delay
United Kingdom Imposes New Visa Requirements on Travelers from St. Lucia and Nicaragua
Iran Conflict Strains U.S.–U.K. Alliance as Trump and Starmer Clash Over Military Strategy
UK Interest Rates Could Rise Above Four Percent Again if Energy Shock Continues, Think Tank Warns
Starmer Defends Britain’s Iran Strategy as Badenoch Urges Stronger Military Support
Labour MP Says She Saw No Sign Husband Broke Law After Arrest in China Espionage Investigation
UK Jobless Rate Overtakes Italy’s for First Time in Years as Labour Market Weakens
United Kingdom Suspends Student Visas for Four Countries in Unprecedented Immigration Move
Campaigners Warn UK Student Visa Ban Could Push Migrants Toward Dangerous Channel Crossings
First U.K. Charter Flight for Stranded Nationals Set to Depart Oman Amid Middle East Crisis
×