House prices are rising faster than the Bank of England was expecting this year, according to Monetary Policy Committee (MPC) member Kate Barker in an article by Edmund Conway published by the Daily Telegraph on their website.
Ms Barker also indicated that, with the economy growing strongly, the MPC was prepared to be more aggressive about raising rates to combat future inflation. She said that while property inflation was far from stratospheric, "on the other hand house prices are rising faster than earnings, and I have to say that's a surprise. In the very long run, it is difficult to think of house price growth being perpetually above earnings, unless there's something else going on, like a constraint on supply. However, it doesn't seem to me that it's unsustainable over the forecast horizon. I think it would go on being true that people should think carefully when they buy a home."
Ms Barker said one of the major reasons for raising rates in August had been fears that higher inflation this winter would persuade employers to increase wages.
