UK housing market could dip again – BoE’s Barker

Britain's recovering housing market could dip again because would-be buyers will struggle to get mortgages, Bank of England policymaker and house market expert Kate Barker said on Tuesday.

House prices in Britain slumped by around 20 percent during the global credit crisis as risk-wary banks withdrew from new lending and the longest recession on record took its toll on confidence.

But the market has bounced back strongly since hitting rock bottom, retracing almost half its August 2007-April 2009 drop.

Barker, who helps to set British interest rates and has penned reviews of Britain's housing supply and planning for the government, said she had been surprised by the rebound.

"It seems more likely than not to me that mortgage finance is clearly not going to be available going forward on the terms it used to be," Barker, who stands down from the BoE's Monetary Policy Committee at the end of May, told lawmakers.

"I was rather surprised by the strength of prices in the housing market through last year and it's possible some people delayed decisions to move or put houses on the market. In some sense that can't continue."

British consumer confidence and spending is tightly linked to the strength of the housing market — the boom of the decade prior to the crisis meant many families could borrow against the rising value of their homes and splash out in the shops.

But much of that has now changed and policymakers want to see consumers move away from debt-fuelled spending to rebalance the economy so that it can better withstand future shocks.

Without a strong housing market to improve the mood on the high street and support demand this year, Britain's economic recovery could prove even more difficult than already feared.

"It's … possible the housing sector will be quite weak through this year," Barker said, adding that parts of the commercial property sector also looked vulnerable.