UK house prices help to buy
UK house prices rose 10.9% between April 2014 and the same month a year before, said NationwideReuters

It is time for authorities in the UK to cool off the country's overheating housing market, according to the OECD.

House prices in the UK are soaring off the back of a strengthening economic recovery, cheap mortgages thanks to schemes such as Help to Buy, and a severely constrained supply of homes. Nationwide said the average price of a home rose by 10.9% across the year to April, to £183,577.

The Bank of England's record-low base rate of 0.5% is also fuelling mortgages as interest rates are held down, but policymakers have hinted that the strengthening recovery will lead them to hike rates in early 2015.

The OECD's economic outlook report said that monetary policy tightening by the BoE "should be accompanied by timely prudential measures to address the risks of excessive house price inflation".

The international economic body added that UK house prices "significantly exceed long-term averages relative to rents and household incomes".

Tougher mortgage lending guidelines for banks were introduced at the end of April in the hope that they will rein in riskier practices and credit being offered to those who can little afford the repayments.

But many want the UK government to go further by limiting the life and scope of the Help to Buy scheme so it supports fewer new mortgages.

The OECD warning follows that of the BoE's own deputy governor for financial stability, Sir Jon Cunliffe, who said that it would be "dangerous to ignore the momentum that has built up in the UK housing market".

Cunliffe's comments were a sudden shift in tone from the BoE, with several policymakers previously having dismissed concerns about the housing market.

There are fears that the proliferation of cheap mortgage credit at a time when interest rates are abnormally low will lead to a wave of defaults when interest rates are hiked and, as a result, repayment costs spike.

But others insist there is no bubble forming in the market, which they argue is instead in recovery mode.

Mortgage approvals remain below historic levels and property prices in most areas of the UK are below their pre-financial crisis peaks.

The Institute for Fiscal Studies (IFS), an influential thinktank, said in a comprehensive report that there is no clear evidence of a bubble in the housing market.