Vince Cable said that the help-to-buy scheme unveiled in the Budget earlier this year could simply “inflate” the housing market as occurred in the last decade.
From next year, first and second time buyers will be offered government guarantees which should allow them to obtain competitive mortgages even if they have relatively small deposits.
The £130 billion scheme has been heralded as a flagship measure which should help boost the economic recovery while allowing hundreds of thousands of people to meet their aspirations of buying a home.
However, some economists and business leaders have voiced warnings about the scheme and Mr Cable – who previously warned about the dangerous levels of debt before the financial crisis – has now indicated he shares their concerns.
“I am worried about the dangers of getting into another house price bubble,” the senior Liberal Democrat said.