By Hugo Dixon
Hugo Dixon is Editor-at-Large, Reuters News. The opinions expressed are his own.
The Achilles’ heel in Britain’s strong economic recovery is the mess in the housing market.
House prices are rising yet again – by 10.9 percent in the year to April, according to Nationwide. This raises the risk of yet another cycle of boom and bust, so much so that the Bank of England recently described rising house prices as the “brightest light” on its risk dashboard.
What’s more, there aren’t nearly enough new homes being built to cope with the soaring number of new households created by rising divorce rates, people living alone in old age and immigration.
True, house building is on the rise. In the year to the end of March, work began on 134,000 new houses – a 31 percent increase on the previous year, according to official figures. But the number of new houses needed each year to meet demand is about twice that.