A 5% cap should be placed on annual house price growth amid fears that the country is heading for a "bubble", surveyors have suggested.
The Bank of England should consider limiting yearly house price inflation to 5% in order to take the "froth" out of any future booms and put a stop to any "dangerous build up in household debt", said the Royal Institution of Chartered Surveyors (Rics).
The body argued that sending out a clear message that the Bank's Financial Policy Committee, which underpins stability, will not tolerate house price rises above a certain limit would restrict any over-the-top price expectations from sellers and discourage buyers from taking on too much debt due to fear of missing out on a house price boom.
Rics suggested the Bank could put the brakes on house price growth by, for example, imposing a ceiling on the amounts of money banks are allowed to lend. It could put caps on the term of a mortgage, the amount people can borrow in relation to their deposit or the sum they can borrow in relation to their income, Rics argued.
Fears have been raised that a recent surge in housing market activity will result in borrowers over-stretching themselves. Recent figures from Halifax showed that house prices are 5.4% higher than last summer and Rics has said that 40% of surveyors have been seeing house prices rise rather than fall, the highest proportion in almost seven years. Asking prices in London are up by 10% year-on-year, according to Rightmove.
New Bank of England governor Mark Carney recently said the Bank is "acutely aware" of the potential threats and said action will be taken to clamp down on mortgage lending if needed.
Rics said similar schemes have previously been used in places such as Canada, where Mr Carney was previously Bank of Canada governor.
Rics senior economist Joshua Miller, who compiled the research, said: "The Bank of England now has the ability to take the froth out of future housing market booms, without having to resort to interest rate increases. Capping price growth at, say, 5% is one way of doing this.
"This cap would send a clear and simple statement to the public and the banking sector, managing expectations as to how much future house prices are going to rise. We believe firmly anchored house price expectations would limit excessive risk taking and, as a result, limit an unsustainable rise in debt."
Lenders, estate agents and property websites have been reporting signs of confidence flooding back into the housing market in recent months following the launch of Government schemes such as Funding for Lending, NewBuy and Help to Buy, which have widened the availability of loans and fuelled a price war among mortgage providers.