RICS calls on Bank of England to cap house prices

A surveyors’ group said that their proposal to limit house price increases to ensure stability in the cost of homes.

09:53 14 September 2013

Following recent months that saw the UK housing market picking up, The Royal Institution of Chartered Surveyors (Rics) has urged the Bank of England to limit house price increase to 5per cent per annum to prevent the creation of an artificial price bubble.

Some experts forecasted that price increases in different parts of UK could exceed 5per cent given the increasing demand from first-time buyers and the low numbers of homes for sale.

Joshua Miller, senior economist at Rics, 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."

Meanwhile, the bank’s governor, Mark Carney, has told MPs that the Bank has necessary toolkit to prevent any potentially damaging boom.