The European Commission (EC) has called on the UK to raise taxes on higher value properties, build more houses and adjust the Help to Buy scheme, reports BBC.
The commission said council tax bands should be revalued, which would put up bills for some people.
Each year the commission offers member states advice intended to help ensure long-term growth.
The Treasury said the UK, as one of the fastest growing economies, would listen to the commission with interest.
In far-reaching recommendations the European Union’s executive body also said the UK should prioritise capital spending.
The commission described Britain’s council tax system as “regressive”, being relatively high on lower value properties.
The UK government said the commission’s recommendations were “in line” with its own approach. EU leaders will discuss the advice this month.
The Help to Buy mortgage guarantee scheme is designed to make it easier for people to get on the housing market.
The commission said: “Action is needed to further boost the supply of houses – by creating appropriate incentives to raise supply at the local level.”
It also said 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”.