The U.K. faces a housing-market bubble unless the government boosts the supply of new homes, the OECD warned yesterday. U.K. home values have climbed 36.6% since 2004, the seventh-biggest rise among OECD nations and back near their 2007/8 bubble highs. The Bank of England said last week mortgage approvals had surpassed 60,000-a-month six months earlier than it had predicted. As Bloomberg's Niraj Shah notes, while the OECD raised its forecasts for U.K. economic growth, it said risks to the recovery include “vigorous” house-price increases that may curtail affordability. We are sure this will all end well - a speculative real estate bubble as the key driver of nominal economic growth? What could go wrong?... Is it any wonder that UK realtors see the crash coming and are asking the government to step back from this policy-induced euphoria [6]?
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Chart: Bloomberg