Capping prices won’t prevent housing bubble ­— Brian Holt

The only solution is to ensure supply meets or exceeds demand – by building more homes, he says.

RICS has called on the Bank of England to restrict loan-to-value and loan-to-income ratios and mortgage durations as part of a research document launched this month. It said similar restrictions had been used successfully in Canada a few years ago.

But Brian Holt says although this approach may have a short-term positive effect it is not the solution.

He said: “It is all about supply and demand. Anything like fixing the mortgage rate or the supply and cost of finance is rigging the market. The RICS suggestion will come back to haunt in years to come if such a policy is pursued.

“And how do you calculate this magical five per cent? No two places increase in value at the same rate.

“This is why the markets are saying that interest rates will increase and the Governor of the Bank of England says not.

“The Governor is like King Canute and at some time the barriers he puts up will be flooded.

“If the Governor has his way for long enough, then we shall all be in for a surprise at some time in the future unless he is able to flatten out the highs and the lows.

“Build many more houses where they’re needed. If supply is greater than demand, then watch the prices level out and then even reduce, if all other things are equal.

“Offering incentives and enabling high percentage mortgages is not a problem as long as one realises that you cannot withdraw them without adversely affecting the market and those who took advantage.

“That is, new purchasers will not be able to have the same benefits as the original purchasers and hence there is a risk the price will fall and the original purchasers will lose out.”