The Bank of England should limit house price inflation in the UK in order to save the country's housing market from another bubble, according to real estate surveyors.

A research report by the Royal Institution of Chartered Surveyors (RICS) said the central bank's Financial Policy Committee should cap annual house price growth at an average of 5% to prevent another crisis in the housing market from "reckless bank lending and a dangerous build up in household debt".

"The Bank of England now has the ability to take the froth out of future housing market booms, without having to resort to interest rate increases. Capping price growth at, say, 5% is one way of doing this," Joshua Miller, RICS senior economist said.

"This cap would send a clear and simple statement to the public and the banking sector, managing expectations as to how much future house prices are going to rise. We believe firmly anchored house price expectations would limit excessive risk taking and, as a result, limit an unsustainable rise in debt."

'Excessive Price Growth'

Following a slump in the aftermath of the credit crisis, the UK housing market is picking up with increased activity and better house prices. The rise in demand for houses is backed by government schemes such as Funding for Lending and Help to Buy, which have increased mortgage lending.

On 10 September, the RICS reported that UK house prices rose at their fastest pace in close to seven years during August as demand is buoyed by mortgage market stimulus.

Earlier, mortgage lender Halifax, Nationwide Building Society and property tracking website Hometrack all reported house price increases for August.

A number of analysts and officials have criticised the government's mortgage-easing schemes, saying those would lead the country to another housing bubble.

Business Secretary Vince Cable raised concerns about the Help to Buy scheme and suggested that the second stage of the policy should not be launched in the near term.

A research note by credit rating agency Fitch said it did not expect building volumes to pick up because of the scheme, though construction firms may come under political pressure to build more homes.

RICS researchers expressed the same concern saying in their report that "excessive price growth and high mortgage lending" have made the banking sector vulnerable. It noted that specific policy on limiting growth is required in the country.

"Such a policy could be implemented with caps on elements such as loan-to-value ratios, loan-to-income ratios, and mortgage durations, or imposing ceilings on the amount banks are permitted to lend, should prices exceed a given limit.

"This policy would discourage households from taking on excessive debt out of fear of missing out on a price boom, and discourage lenders from rushing to relax their lending standards as they compete for market share."

Meanwhile, the Council of Mortgage Lenders (CML) on Wednesday said that fears about the housing boom are unnecessary, as the pace of housing activity is moderate in the country.

"We are a long way from such conditions and we do not imagine that Bank officials are losing sleep about current developments in the housing market," the CML said.