UK House Price Warning Issued By Think-Tank

George Osborne believes the UK "should be vigilant" about the housing market amid warnings action may be needed to prevent it over-heating.

But the Chancellor said the Government had given the Bank of England "the powers, the tools" to deal with this.

It came as the Organisation for Economic Co-operation and Development (OECD) upgraded its growth forecast for the UK to 3.2% this year.

The Bank of England has the "tools" to deal with the housing market

The think-tank revised its estimate from 2.4% last November, saying it believed the recovery had now "taken hold".

But it cautioned consumer spending remained the main driver of growth, and urged the Government to consider measures to ensure "balanced" house price rises.

Globally, the body reduced its 2014 growth forecast from 3.6% to 3.4%, with the US and China downgraded to 2.6% and 7.4% respectively.

OECD secretary-general Angel Gurria said: "We are still not out of the woods yet."

Mistakes of the last government have been learned, insists Mr Osborne

The OECD said the recovery in the UK had "taken hold" and growth was now "robust", although it noted that consumer spending was still the main driver.

Its report said: "Policy interest rates are expected to begin to rise in 2015 as economic slack narrows and inflation pressures gradually build up.

"Further prudential regulation measures should be considered to ensure a balanced housing market recovery."

The Treasury has been criticised over the Help to Buy scheme underwriting home loans for people without large deposits, amid strong price growth - particularly in London and the South East.

Pressed over whether he felt the scheme should be curbed, Mr Osborne replied: "I've said we should be vigilant about the housing market and this Government has given the Bank of England the powers, the tools, to do that in an independent way.

"That didn't exist before, but we've learnt from the mistakes of the last government and the Bank of England has the tools and independence to do what it feels it needs to do to help to contribute to building that resilient economy."

On the revised growth forecast, Mr Osborne, attending a meeting of EU finance ministers in Brussels, said: "These forecasts from international bodies, the OECD, the rest of the European Union, are a real vote of confidence in the UK's long-term economic plan."

In a Twitter post Prime Minister David Cameron said the revision was a "sign our #LongTermEconomicPlan is working, meaning security #ForHardworkingPeople".

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