Call for cap on house price growth

Call for cap on house price growth

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.