UK needs more houses

Earlier today the ONS revealed that house prices had increased by 10.5% in the year to May 2014, up from 9.9% in the year to April 2014, but Brown said there is a limit to what mortgage industry can achieve.

He said: “Mortgages can only do so much – we need more houses.

“The MMR has already had a cooling and stabilising effect on lending practices, with borrowers less able to overstretch themselves.”

But he warned that this only highlights a more fundamental problem.

He added: “Families trying to find a home they can afford are not necessarily sticklers for macro-prudential stability.

“At heart we are all facing a very simple problem – there are just not enough places to live to go around.

“In the rental market things are starting to improve, with average rents up by less than inflation for every month in the last year.

“This demonstrates how more supply can help to keep the cost of housing under control. So the purchase market needs to take a leaf out of this book. House building is the answer, and we still need much more.”