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LONDON, June 13 (Reuters) - Shares in Britain'shousebuilders and property developers fell on Friday after thegovernment and the Bank of England signalled they were ready tointervene to cool the country's surging house market.
British house prices have risen by 11 percent over the lastyear, benefiting house builders but leading to concerns that abubble could develop.
Finance minister George Osborne said late on Thursday hewould now give the Bank of England stronger powers to curbmortgage lending, while the Bank's Governor Mark Carney alsonoted that interest rates could rise sooner than expected, inhis strongest warning yet.
Shares in the country's biggest housebuilders includingBarratt Developments and Persimmon, fell over 4percent, dragging down the FTSE 100 blue-chip index,while Bovis Homes Group, Taylor Wimpey, Bellway and Berkeley Group, were down between 3 and 4percent.
Land Securities and British Land, thecountry's two largest listed property developers, were also hit,with shares in both groups down over 3 percent.
"The authorities are gearing up to rein in the housingmarket," Berenberg economist Robert Wood said. "Action is likelyto be gradual and gentle, but make no mistake, it is on the way.
"So the change in powers is less significant than themessage it gives."
Osborne said the housing market was not an immediate threatto Britain's financial stability but could become one in future.
"I want to make sure that the Bank of England has all theweapons it needs to guard against risks in the housing market,"he said in a speech to London's financial community.
The central bank will in future be able to stop Britonstaking out mortgages that are too big compared with their incomeor the value of their home, rather than just make suggestions tolenders as it does now.
Osborne also announced changes to planning rules that hesaid would allow as many as 200,000 homes to be built on formerindustrial sites in urban areas. (Reporting by Kate Holton; Editing by Paul Sandle)
