Property and the Economy - speech by David Clementi

In a speech today at the international dinner of the Chartered Surveyors' Livery Company, David Clementi, Deputy Governor at the Bank of England, discusses the importance of the property market for monetary and financial stability, two of the Bank's Core Purposes.
Published on 29 April 2002

Mr Clementi notes that the divergent trends in house prices and commercial rents "mirror the current imbalances in the UK economy, on which the MPC has had a good deal to say in its minutes. The buoyancy of the housing market is closely associated with the strength of domestic demand; while the relative weakness of the commercial market mirrors the retrenchment in the scale of the operations of multinational companies in the UK, as well as the effects of the slowdown in global demand on internationally-exposed UK companies. As with all imbalances, this situation will eventually have to be resolved. But this need not necessarily involve a sharp correction in residential property prices. The MPC's central projection for activity and inflation has been consistent with a more gradual cooling in residential demand, and some recovery in the commercial sector on the back of an improvement in the international economic environment."

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