LONDON, June 13 Shares in Britain's
housebuilders and property developers fell on Friday after the
government and the Bank of England signalled they were ready to
intervene to cool the country's surging house market.
British house prices have risen by 11 percent over the last
year, benefiting house builders but leading to concerns that a
bubble could develop.
Finance minister George Osborne said late on Thursday he
would now give the Bank of England stronger powers to curb
mortgage lending, while the Bank's Governor Mark Carney also
noted that interest rates could rise sooner than expected, in
his strongest warning yet.
Shares in the country's biggest housebuilders including
Barratt Developments and Persimmon, fell over 4
percent, dragging down the FTSE 100 blue-chip index,
while Bovis Homes Group, Taylor Wimpey, Bellway
and Berkeley Group, were down between 3 and 4
Land Securities and British Land, the
country's two largest listed property developers, were also hit,
with shares in both groups down over 3 percent.
"The authorities are gearing up to rein in the housing
market," Berenberg economist Robert Wood said. "Action is likely
to be gradual and gentle, but make no mistake, it is on the way.
"So the change in powers is less significant than the
message it gives."
Osborne said the housing market was not an immediate threat
to Britain's financial stability but could become one in future.
"I want to make sure that the Bank of England has all the
weapons it needs to guard against risks in the housing market,"
he said in a speech to London's financial community.
The central bank will in future be able to stop Britons
taking out mortgages that are too big compared with their income
or the value of their home, rather than just make suggestions to
lenders as it does now.
Osborne also announced changes to planning rules that he
said would allow as many as 200,000 homes to be built on former
industrial sites in urban areas.
(Reporting by Kate Holton; Editing by Paul Sandle)