Although this week’s figures showed that the number of mortgage approvals for house purchase have risen by over 30 per cent in the past 12 months, they are still only half their peak levels. And net mortgage lending in the last three months, at £3.3bn, has been only one-fifth of its peak level. Investec’s Philip Shaw estimates that the ratio of household debt to annual income has fallen from 151 per cent at its peak to 128 per cent now.
What's more, households' borrowing in the second quarter was matched by their saving, implying that households in aggregate were net lenders to the rest of the economy. This is a sharp contrast to previous house price bubbles, when they were big net borrowers.
And across the country as a whole, it's unclear whether prices are dangerously high. Economists at Lloyds Banking Group estimate that average prices are now 4.63 times average male full-time earnings. While this is above their 30-year average (of 4.07) it is below the peak of 5.8 reached in 2007.
The Bank of England's Financial Policy Committee is also relaxed about house prices, noting that activity and loan-to-value ratios are "below their historic averages."
Not everyone, though, is so comfortable. Danny Gabay at Fathom Consulting doubts whether George Osborne's promise to have the FPC review Help to Buy can prevent a bubble; he points out that several Bank economists failed to see that house prices were unsustainably high in the mid-00s. He warns: "Prices are already way too high."
