This week the Chancellor announced enhanced powers for the Bank of England to calm the housing market.
The trouble is nobody is quite sure that they will work. So I’ve been to Norway, one of the few developed countries in the West to have tried them, to see what lessons we can learn.
Like Britain, Norway has a booming housing market fuelled in part by interest rates which have been kept unusually low for years.
Just like here, the Norwegian central bank has been reluctant to raise rates (albeit for different reasons) so authorities needed other means of cooling property prices.
First the Financial Supervision Authority, a regulator, issued guidelines to banks that they should require borrowers to put down at least a ten per cent deposit.
It raised this a couple of years later to 15%. This dampened down demand for mortgages as people found it harder to save up a lump sum.
Secondly, the finance ministry required banks to fund more of their mortgage lending by issuing shares instead of borrowing the money.
Banks don’t like this because they say it’s expensive but it makes them more resilient to a crashes as they build up capital, which can be used in an emergency.
This also helped cool the housing market because it made mortgage lending less appealing to banks: it limited the supply of mortgages.
Both measures combined certainly seemed to take the wind out of sales and after six years of prices rising between seven and ten percent a year, they started falling about the middle 2013.
So far so straightforward, but that’s not the whole story. When the taps were turned off and young people, especially, found it very difficult or even impossible to scrape together a large deposit, many of them rounded on the regulator.
Kristin Myrvang Gjorv, a 28-year-old graduate who holds down three jobs quickly realised her dream of buying a flat would remain just a dream for many years.
“I felt angry,” she told me in the kitchen of her rented flat. The head of the FSA admitted he had come in for a roasting in the press.
“It proved to be rather controversial,” said Morten Baltzersen. Owning your own home is even more of an obsession in Norway than it is in the UK.
Jon Gunnar Pedersen, finance minister, told me why: “You have to have a good house, simply to survive the weather conditions we have here. Eventually every Norwegian expects to own their own home.”
His centre-right party was elected partly on the promise of easing the mortgage guidelines.
They want banks to look at an individual’s earning potential, not what they can afford now – and wrote a carefully vague open letter to Mr Baltzersen to this effect, which many people I spoke to in Oslo think undermined his position.
As one bank broke ranks, and then another, they are all becoming less stringent in their lending and house prices in Norway are rising again. The whole policy may be unwound.
So as officials at the Bank of England settle into a day of deliberations next week on how to tackle the housing market, what can they learn from Norway’s experience?
They can take comfort from the evidence that unusual measures like requiring high deposits from borrowers combined with higher capital from lenders do seem to calm property markets.
In the UK the Chancellor also strengthened the Bank’s power to limit British borrowers’ income multiples, too – and there’s some evidence from other countries that this may have a similar effect.
But they should beware of straying into the political fray. Imposing restrictions on mortgages means Bank officials are deciding who has access to buying their own home, a distributional decision which is normally left to politicians.
They may be taken aback by a hostile response. Likewise, politicians should be wary of intruding on the Bank’s decisions for fear of undermining the policy.
The Chancellor made clear yesterday that he has given the Bank complete independence to make its decisions.
Yet talk is cheap and he may find the temptation to comment irresistible if housing becomes contentious. However there are two further points which became clear in Norway: the fundamental problem is not to do with mortgages but is one of supply of housing.
There simply isn’t enough to accommodate a growing population - a very familiar problem here in the UK.
Finally, as similar as the story may be in Norway, there are many differences which mean we can’t be sure these measures will work in the UK.
Britain is much larger, it taxes property differently, we have a different immigration policy, different rates of home ownership, different aspirations.
We can observe what has happened in Norway (and Hong Kong, South Korea and others) but ultimately the Bank may be about to start what is a very impressive and very important experiment.
We’ll hear the result of their deliberations on 26th June.