The recovery in house prices has been accompanied by concerns that an unsustainable bubble is developing. At the moment, the indicators on housing market activity favoured by the Bank of England are not pointing to a housing market that is running out of control, and which therefore poses a risk to financial stability. But if market conditions are still tight by next spring, that risk will grow and Mark Carney may find himself having to rein in the housing market using untested tools.
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