The EC has recommended that the British government should “deploy appropriate measures to respond to the rapid increases in property prices in areas that account for a substantial share of economic growth in the United Kingdom, particularly London”.

Here are their three core recommendations:

1. Raise taxes on higher value homes

“At the moment, increasing property values are not translated into higher property taxes as the property value roll has not been updated since 1991,” the EC’s report says.

The commission recommends reforms to taxation of housing and land, in order to “alleviate distortions in the housing market”.

2. Build more houses

The document says that the government could do more to stimulate more house building. The lack of supply has been blamed for the rapid rise in prices seen in recent months.

The document said: “Action is needed to further boost the supply of houses - by creating appropriate incentives to raise supply at the local level.

3. Reform Help to Buy

Cameron has already signalled that he is willing to listen to advice from Bank of England Governor Mark Carney over the government’s Help to Buy scheme.

The EC report adds that “the authorities should continue to monitor house prices and mortgage indebtedness and stand ready to deploy appropriate measures, including adjusting the Help to Buy 2 (loan guarantee) scheme, if deemed necessary.”

The EC’s advice is likely to rile the government which is trying to maintain that its economic plan is working.