On these fair shores, the sentiment surrounding the value of our little piece of England upon which sits our very own castle, has more impact on economic policy than in any other part of the world. Our very well being seems emphatically linked to the growth or decline in the value of our home and now our government’s reaction to the impact of such sentiment on the economy is to devise policy to curb the wild swings that we have come to know during our boom & bust eras.

As we emerged from recession in 2013, confidence in the housing industry was considered essential to aid economic growth and measures such as Help to Buy were used as levers to get Britain building again. However, now that the London and south east market have quickly reached fever pitch levels of house price inflation, the fear of ripple effects rolling out to the regions has introduced a new level of panic resulting in BoE Governor, Mark Carney providing strong indications that interest levels may rise sooner than the financial markets had expected.

Yes, we all know that unemployment levels are falling, the export market is recovering and the economy is back in growth but surely the modest numbers indicate serious fragility and with house building levels still far below those necessary to resolve the country’s desperate housing crisis, now is not the time to stifle too greatly the development of this vital sector.

In this sense, the regulations introduced to restrict mortgage lending under the Mortgage Market Review seem initially to have performed the task of taking some steam out of housing market activity. Under the proposals, mortgage providers will not be allowed to lend any more than 15% of residential mortgages at more than 4.5 times a borrower’s income. In addition, the BoE’s Financial Policy Committee recommends that lenders check mortgage applicants can cope with a 3% rise in interest rates – slightly tougher than the current affordability checks.

Whilst figures are expected to show that house prices increased 0.5% month-on-month in June, this is a considerable weakening over the recent volatile climbs in values and is seen as a direct result of tighter lending conditions and the fear of an interest rate hike.

What worries Mark Carney most about the housing market is us good citizens of England wanting more housing than exists. Pretty simple demand & supply economics really but no matter the state of our personal debt, the moment we feel our income is rising or even has a chance of rising then as a nation, we fall back to our default preference of wanting to buy houses and supply is just not keeping up with demand

The juggling act that both the government and the BoE have to contend with is to ensure that the new measures designed to cool the housing market do so whilst not derailing the economic recovery. In the meantime, Britain must continue with its programme of house building with all the vigour it can muster; the consequences of losing momentum will be a far greater burden for the country to bear and will do more than anything else in allowing us slip back into the mire of recession.