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 said the plan “could be a problem, it could inflate the market” but conceded “if it’s properly designed it could be a useful addition.   We mustn’t risk returning to the problems of the last decade when housing got out of control.”  Statistics show that house prices are rising at their fastest rate for more than three years as confidence returns to the property market.  Nationwide Building Society is forecast to report that prices have risen by 0.4% in the month – with an annual increase of 3%.

The Business Secretary said that his party was more concerned about promoting house-building rather than property buying and said there was a “chronic deficit of social housing”.

Mr Osborne unveiled the details of the scheme last month and insisted that those with poor credit records would not be able to borrow too much.  He said that he could not see the conditions under which a housing bubble would be created.

The Chancellor said “I am determined to back people who want to do their best for their families.  Help to Buy is about getting behind those who aspire to own a home.  “The mortgage guarantee will support an increase in high loan-to-value mortgages for people who can’t afford large deposits, and it will also boost house-building.”

Martyn R Cox & Co believes that Government support for first time buyers is a good thing, but there should be sensible controls to avoid unsustainable debt.  House prices often rise for many years, but they also fall as we saw in 2008/9 and no one wants to slip into negative equity.