Rob Wood, chief UK economist at Berenberg Bank, says Yes.
The Bank of England has a powerful set of weapons in its armoury to smooth out the cycles in the housing market.
It can restrict the amount someone can borrow relative to their income, and the Bank has now asked formally for new powers to force buyers to put down larger deposits. Policymakers can also force banks to hold more capital to cut system-wide risks.
Obviously, the Bank cannot fine-tune house prices with these tools. Preventing boom and bust entirely would require an amazing degree of foresight to detect bubbles.
Feeble levels of housebuilding will continue to raise prices, and the central bank will not fight this.
But it can use its powerful tools to lean against dangerous debt build-ups and smooth the housing cycle.
These tools have worked in other countries, and they are already slowing London price inflation.
Boom and bust will never be eradicated, but the central bank can smooth the cycle considerably.
Paul Smee, director general of the Council of Mortgage Lenders, says No.
Would proposed new directive powers for the Bank of England help resolve financial stability risks if housing market pressures arise? Yes.
But would they necessarily address the reasons why these pressures might arise in the first place? No.
The mortgage market is not the same as the housing market. Supply and demand for mortgage finance is one thing; supply and demand for housing itself is quite another.
And it is the inelasticity in the supply of housing that poses the risk of stoking top-heavy demand for mortgages.
There’s no getting away from the fact that we need more housing – of the right kind, in the right places – if we want a truly sustainable, long-term market.
The new powers target the financial consequences of this housing shortfall. But it is neither the Bank’s job nor its mandate to address the causes.
That is a matter for government policy, supported by willing participants in the planning and building sectors.