Kate Barker, the Bank of England monetary policy commission member and housing expert, gave an upbeat assessment of the housing market this week despite warning that it remained “vulnerable” to a downturn.
Barker, speaking in Southampton this week, conceded that the turmoil on the credit markets had increased the risk of slowing house price inflation, but insisted it did not alter “previous expectations of continued robust house price growth”.
But she said the buy-to-let market, which accounts for about 12% of mortgages, could be a “source of weakness”. Her comments come as Chesterton, a leading estate agent, said plans to abolish “taper relief” on capital gains tax would harm the buy-to-let market.
Richard Davies, area director at Chesterton, said: “There are concerns that we’ll see a flood of buy-to-lets being put on the market after the April deadline, as there is no incentive to invest in property on a long-term basis.”
A number of housebuilders have said they may be forced to scale back production because of slowing house price inflation.
Barker conceded there could be a “modest” negative effect on economic growth if housebuilding were to slow, but she insisted that the overall impact would be minimal.