A superbubble, record-breaking and disastrous – official figures released last week showing that London house prices rose by almost 18% in the year to February had commentators reaching for the superlatives, and everyone else wondering where it would end. The figures from the Office for National Statistics came hot on the heels of data from Nationwide building society showing that overall UK house prices were up by 9.2% year-on-year in March. and claims from property website Rightmove that Londoners are now putting homes up for sale at prices more than 40% higher than the previous peak .

Fears of a bubble have been growing since late last summer, when price inflation seemed to step up a gear. Now, just over a year from the launch of the first part of the government’s Help to Buy scheme, the London boom appears to have started rolling out across the rest of the country. There are still places where people are in negative equity, where homes sit on the market for months and estate agents are fending off sellers rather than buyers, but it’s not just in London that phrases like open house and sealed bid are entering everyday conversation.

It may make those on the property ladder feel richer, but ever-rising prices mean buyers are stretching their finances to breaking point on high mortgage multiples. And they are the lucky ones: record numbers are locked out of the market altogether. A survey last week showed that half of would-be and existing homeowners believe the UK will become a nation of renters within a generation. Home ownership has already fallen to its lowest level in 25 years. So what could be done?

1 BUILD MORE HOMES

The single thing that will do most to limit price inflation and, more importantly, make homes more easily available to those who need them is to build more.

An estimated 250,000 new properties are needed each year, but building has not been at that level since the 1970s. In 2013, 109,370 homes were completed and 122,590 were started .

Bank of England governor Mark Carney acknowledges the problem is a supply-side issue but reckons he can do nothing about it. He points out that Britain is building half as many homes a year as his native Canada, despite having a population twice as large.

The first part of Help to Buy was designed to address the stalled building market by offering buyers of new-build homes an interest-free loan of up to 20% of the cost; in its first 11 months, this resulted in just under 17,000 extra homes being built.

The Get Britain Building scheme, which was designed to create 16,000 homes, had by September only produced 715 completed properties, so government schemes alone are not making up the numbers.

Higher housebuilding targets for local councils might help relieve some of the pressure of too many people chasing too few houses. Only in the last couple of years have local authorities been required to increase provision for homes, but targets are still too low.

David Jackson of property adviser Savills says that the London plan writes in an annual shortfall of 7,000 homes: London’s target is 42,000 homes a year but all the evidence points to a need to create at least 49,000, he says.

But building more homes is not a quick fix. Jackson says it can easily take five years from a site being identified to a removal van pulling up outside the front door.

2 MORE GARDEN CITIES

Chancellor George Osborne trumpeted government plans for a new garden city at Ebbsfleet in last month’s budget. It will create an additional 15,000 properties to meet needs in the south-east. But Jackson says: You’d need to be building the equivalent of an Ebbsfleet-sized garden city every two years to meet the shortfall from London alone. Garden cities are not therefore a panacea.

3 MAKE CHANGES TO STAMP DUTY

Danny Dorling, professor of geography and author of All that is Solid. disagrees with the premise that building will fix things. Homes are not like potatoes, he says. You can’t suddenly flood the market and watch the price come down. Dorling believes the problem is distribution, not supply – people are living longer and not releasing stock as in the past. Also, when incomes are more equitable, as they were from the 1940s through to the 1970s, most families can only afford one home.

Dorling’s argument that homes are no longer being released suggests that we need to encourage people out of large family properties – an argument also put forward by the Royal Institution of Chartered Surveyors last year. It recommended exempting people over 65 from stamp duty when they downsize from a larger property to a smaller one.

Matthew Pointon at Capital Economics agrees that stamp duty is a sticking point: [It] is a transaction tax and reduces incentives to trade down, leading to an inefficient use of the housing stock.

Fionnuala Earley, research director at estate agent Hamptons, says that changes to stamp duty for all buyers could encourage more movement. Instead of higher rates kicking in at set thresholds and being chargeable on the whole value of a home, the tax could be on a sliding scale. At the moment, you get a distortion at the price points and it makes it very difficult to move, she says. More movement means more supply of homes for sale, which should hold down prices.

4 CGT ON ALL HOUSE SALES

Currently, any profit you make on the sale of your main residence is free of any kind of tax. Only sales of second homes or additional properties attract capital gains tax (CGT).

David Blanchflower, a former member of the Bank of England’s monetary policy committee, argues that the UK should roll out CGT further, adopting a model similar to one in place in the US. This is a better fix than a wealth tax as you don’t need the bureaucracy to value as for a ‘mansion tax’ – you just use purchase and sales prices, he says.

The US model has exemptions: the first $250,000 of profit does not attract a bill if there’s a single seller, while if a couple is moving, they don’t pay any tax on the first $500,000.

Exclusions could be adapted, and rates varied, so that larger gains could face higher tax charges. While this might make people less inclined to sell their home at a large profit, it might not deter them entirely – investors face a CGT bill on stocks and shares, fine wines and vintage cars, but still trade them in the hope of good returns. It would, however, reduce the amount of money that could go into the next property being bought, which should help calm prices – and the revenue could be used to replace stamp duty entirely.

5 BAN OR TAX FOREIGN INVESTORS

The marketing of prime London property to overseas buyers – entire developments not offered to local residents, but sold off-plan using scale models and glossy brochures to foreign investors, mainly in China – has been the story of the past year.

As money pours in from abroad, goes the argument, our own millionaires are priced out to secondary areas, where they in turn price out ordinary families. Although someone trying to buy a property in the outer London zones was never going to buy in Mayfair, they now even end up struggling to afford somewhere in the suburbs.

According to estate agency Knight Frank, around 28% of purchases in prime central London neighbourhoods were made by non-UK residents in the 12 months to June 2013.

Both Tory and Labour MPs have pledged to force developers to market in the UK before overseas, but some believe we should go further and either tax homes left empty or even prevent non-residents buying homes at all.

It would stop more money being parked in the UK, and could make it harder for those who already own high-end homes to sell on. This is already policy in some countries, including India and China, although a loophole allows non-residents to own five-year leases in India.

Earley, however, says that argument is very shortsighted. If it is being let out, it doesn’t matter who owns it, she says. The problem is, some of these properties are buy-to-leave homes, used for just short periods each year.

Other nations have opted for higher taxation on non-residents. In Hong Kong, foreign investors face an additional 15% in stamp duty, which has reportedly deterred speculators and reduced transactions – but it has not reduced the cost of property further down the chain. What has had an impact on prices overall is Chinese buyers cashing out to raise funds to spend at home, with many offering big discounts on luxury homes.

A major shock in another country, or a strengthening of the pound, could have as much effect as a ban.

6 AN ANNUAL PROPERTY TAX

Pointon argues for the introduction of an annual charge on properties, which could be introduced by revaluing and changing council tax bands. Essentially what you are trying to achieve is VAT on housing consumption, but without charging it all up front, like with most goods and services, he says.

With this type of tax, says Pointon, a strong increase in house prices would automatically lead to a higher tax charge, weighing down on the boom. However, he acknowledges that this effect would only occur if homes were revalued relatively frequently – an exercise that has cost implications.

Yolande Barnes, head of research at Savills, suggests that an annual tax of 0.6% on homes could replace council tax. But she fears that could polarise the market further. In London, she says, the very wealthy would not be put off by it, while equity-rich, cash-poor homeowners – older people, or people who had been in the same home for a long time – could find themselves with large bills. It might actually lead to an exodus of a certain type of Londoner.

7 TAX LANDLORDS MORE

Landlords currently pay CGT when they sell investment properties, but they have tax breaks during ownership which, according to campaign group the Intergenerational Foundation, are worth more than 5bn a year. Scrapping rules that allow them to offset mortgage interest and the cost of wear and tear against their tax bill will reduce potential profits and make the whole enterprise less attractive. Without landlords competing for homes, upward pressure on prices might subside.

However, the wrong changes to taxation could have a negative effect on the provision of rented homes: arguably, allowing tax breaks and profits allows people to make a business of letting homes, while removing financial incentive could drive out professional landlords.

8 RESTRICT MORTGAGE LENDING

New rules on mortgage lending come into force this month that will mean banks and building societies have to do thorough affordability checks before granting mortgages, and this is expected to have a small impact on borrowing.

However, tougher action could be taken to reduce how much people could borrow to fund homes. This could involve imposing limits on mortgage lending to potential homebuyers as a multiple of earnings, also demanding banks hold greater buffers against lending, says economist Howard Archer.

Some four out of 10 current purchases are made with cash, so a limit on lending would have no impact on many buyers. But Capital Economics’s Pointon believes any such move would affect the mood of the market.

If the government took action to cool the housing market, and people believed it would work, that could help to prevent a boom, he says.

That was probably what the Bank of England was trying to achieve when it modified its Funding for Lending scheme. The direct impact of that on mortgage lenders was virtually nil, but it did send the message that the Bank had its eye on the housing market and was prepared to take action.

9 FILL EMPTY HOMES

One way to reduce the supply gap would be to use all of the existing housing stock. Figures released earlier this month by the government show that the number of empty properties in England fell to a 10-year low in 2013, but there are still many thousands of under-used homes.

In total, 635,127 homes across the country were vacant, of which 216,050 had been empty for at least six months. Allowing councils to charge council tax on all empty properties, and introducing a premium for those empty for longer than two years, has already led to a drop in numbers.

There are larger numbers of vacants in areas like Durham and Northumberland, where further tax on empty properties could help force their owners’ hands – as could one-off charges, such as the 60,000 payment proposed by Islington council on vacant new-builds .

10 ALL OF THE ABOVE

In fact, most economists agree that no one change is likely to do the job on its own. As Archer puts it: I doubt there is any single measure that would prove to be a golden bullet, but a combination of measures could have some impact.