The Home Builders’ Federation (HBF) today warned the government and the Financial Services Authority that regulation of the mortgage market was not a solution to the threat of future house price inflation.

The body, which has around 300 members accounting for 80% of the market, said that the addressing the ‘key issue’ of land supply was ‘critical’ to control house prices.

Speaking today at HBF’s policy conference, executive chairman Stewart Baseley said: ‘If the FSA and government go down the route of mortgage control to try to head off future asset bubbles they are likely to entrench and worsen future housing under-supply that is rooted in the constraint of land supply.

‘House price booms are caused by an imbalance between supply and demand and the long term solution to escalating prices is to ensure there are enough homes to meet demand, not to impose regulation that takes no account of personal circumstance or risk that could discriminate against people perfectly able to realise their ambitions of home ownership.

‘We are cleaning the car window when the petrol tank has a hole in it.’

The HBF said that without land a shortfall in the number of homes that the country needs was inevitable, which would in turn inflate house prices.

The warning was made in advance of tomorrow’s publication of Lord Turner’s report into the future of financial regulation.