Great Graphic: UK Housing Market Problem?

Bank of Governor Carney suggested that the UK housing market poses the greatest threat to the economic recovery.  This Great Graphic, tweeted by Neil Hudson, using ONS data, suggests otherwise.    It shows the evolution of house prices (3-month average) relative to the 2007/2008 peak for eleven main regions, including Scotland and Wales.  

London property prices clearly stand out.  They are 25% above the prior peak.  South East and East are also above their prior peak but only by a few percentage points.  In the other eight regions, house prices are below their peak.  Houses in the North East are about 10% below their peak, for example.   We note that house prices in Scotland turned down in the middle of last year, but it may not be related to the referendum later this year.  

London may have a housing market problem, but it is not a generalized condition.   The role of foreign money is widely recognized.  Moreover, much of those transactions may not be sensitive to the type of macro-prudential policies that are begin discussion.  Most of those purchases appear for cash and are not leveraged.  The risk then is that barring a special tax on foreign purchases or sales, UK policies end up hurting the softer housing markets while unable to cool of London's hot market.