UK real estate experts are warning that stronger curbs must be considered for the country's housing market amid fears that London is starting to show "bubble-like conditions".
By 2018, the average house price in London is expected to reach nearly 600,000 ($1.2 million) - three and a half times theaverage house price in Northern Ireland and more than three times the average in the North East, according to a report from economic forecasting group EY ITEM Club.
The report said that, while the rest of the UK is returning to normality, London's housing market is showing signs of "bubble-like conditions" and policy makers should be prepared to step in.
It said the Bank of England's Financial Policy Committee (FPC), which oversees stability, may need to consider imposing a formal limit on income multiples in relation to the size of the mortgage that someone wants to borrow.
The report came as a separate paper from think-tank Civitas suggested restrictions be placed on overseas investment in London homes to help ease "rampant house price inflation" and the problem of younger people and families being priced out of the market.
Some analysts have criticised the Government's flagship Help to Buy scheme, which gives people with only low deposits saved a helping hand, for pushing up demand in the housing market at a faster pace than the supply of properties for sale.
They say this imbalance between demand and supply is fuelling an upward pressure on prices.
The report said that income multiples were a "key measure in judging the sustainability of prices", and urged caution on the part of borrowers and lenders.
Recent Land Registry figures showed house prices in London increased at more than double the rate of the rest of the UK over last year.
London house prices leapt by 11.2 per cent last year to reach 403,792 on average, while prices across England and Wales generally lifted by 4.4 per cent in the 12 months to December to reach 167,353. AAP
