Feb 28 (Reuters) - UK’s property-market rebound is beneficial for economic recovery and does not yet pose a risk of overheating, Bank of England Chief Economist Spencer Dale told Bloomberg in an interview on Friday.
“What we have seen in the housing market is one which has moved from dormant to one which is functioning more like a normal market, which I think has been good for our recovery,” Dale said.
He told the media service that the increase in prices, sales and mortgage lending has not risen to unsustainable levels as transactions are still “well below” normal.
“Any of us who have lived through any sort of economic history will know you can go from a healthy housing market to an overheating housing market very quickly, and so our job is to worry about those types of things and be alert to it,” he said.
“We are fully alert to that risk and we are worrying about it. But I do not think those risks are materializing at the moment,” Dale added.
Dale said the pickup in transactions will support demand by spurring home building and construction, as well as purchases to furnish homes.
He said that with the formation of the bank’s Financial Policy Committee, in operation since April last year, the Monetary Policy Committee is free to leave the key interest rate at a record-low 0.5 percent for longer while the new panel deploys macro-prudential tools to tackle risks to financial stability.
If housing overheats, “the onus on us to do something about it is less now. Quite rightly the initial onus would be on the FPC. They are the first line of defense,” he told Bloomberg.