Chancellor moves to stem house-bubble fears

The Chancellor moved to calm fears of housing market instability following suggestions from Bank of England governor Mervyn King earlier this week. See our Tuesday story - BoE warns house price crash more likely

On two separate occasions this week Gordon Brown used the opportunity to deny there was any potential instability in the housing market.

Speaking on GMTV the Chancellor refuted suggestions that the Bank of England governor had said it was a bad time to buy a home. “He [King] did not actually say that,” said Brown, “There are obviously risks - we have got terrorism around the world, we have got oil prices that have gone up.”

"We have to deal with all these. We have to ensure that throughout all these changes, massive changes taking place around the world, we maintain that stability," he said.

And using a speech last night at the Mansion House dinner of City grandees, Brown again took time to calm fears, saying that debt servicing costs were much lower than during the house price crash of the early 90s.

The chancellor repeated earlier comments that with interest rates at much lower levels than at the end of the housing boom of the late 80s, the risks of a crash were small.


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