May 1, 2014 / 5:35 PM / 3 years ago

BoE's Cunliffe says dangerous to ignore rising British house prices

LONDON, May 1 (Reuters) - The Bank of England will have to decide in coming months whether to cool surging house prices as it would be “dangerous” to ignore the momentum that has built up, Deputy Governor Jon Cunliffe said on Thursday.

“It would be dangerous to ignore the momentum that has built up in the UK housing market since the spring of last year,” Cunliffe told a banking industry dinner.

Mortgage lender Nationwide said on Thursday that British house prices last month recorded their biggest annual rise since the start of the financial crisis in 2007.

Growth in prices has not been limited to London and is due to pent-up demand and tight supply of properties, Cunliffe said.

There was good reason to believe such a “mutually reinforcing combination” could lead to a period of sustained and very powerful pressure on house prices, he said.

“This is a move that has been seen more than once in the UK,” he added.

Cunliffe sits on the Bank’s Financial Policy Committee (FPC) which has powers to make recommendations to regulators to take action.

“Whether and how to act further if, following the pause of the last couple of months, momentum continues to build, will be the most challenging judgement the FPC will have to take in the coming months,” Cunliffe said. (Reporting by Huw Jones; Editing by Susan Fenton)

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