Britain's property prices are set to be reined in after the government confirmed it would grant more power to the Bank of England to curb and tighten mortgage lending practices.

UK Chancellor George Osborne said in a statement that, after a public consultation, the BoE would be given formal powers to overrule lenders rather than just recommending the limitation over doling out mortgages.

"We're confirming that the Bank of England will have further powers to safeguard the stability of Britain's financial system from any future risks posed by our housing market or banks," Osborne said in a statement.

According to data from the Office for National Statistics, the average UK house price stood at £271,000 (€360,223, $407,423) in October last year.

This is a slight decline from £273,000 in September 2014 and £274,000 in August.

Annual house price inflation was 12.5% in England, 5.8% in Wales, 7.6% in Scotland and 10.9% in Northern Ireland.

The BoE has also kept UK interest rates at a record low of 0.5% since 2009, meaning mortgage repayments are a lot lower than recent years.

The BoE started to cap mortgage lending on 1 October while the Financial Conduct Authority (FCA) installed new affordability checks for homeowners to stop soaring UK house prices.

However, a lack of supply has buoyed up property prices and new government schemes to get more people on the housing ladder has caused major concern over house price inflation.