Société Générale global strategist Albert Edwards repeated his claim that the Chancellor’s flagship scheme would lead to an explosion in prices. He called for the mortgage guarantee scheme, due to launch in January 2014, to be stopped.

The notorious market pessimist continued: “A word of warning to George Osborne. If he presses on with phase II of ‘Help to Buy’ (votes) and the UK does suffer its inevitable bust, history may judge him even more harshly than [former US Federal Reserve chairman] Alan Greenspan.”

South Korea’s humiliating arrest of its finance minister in the wake of the 1997 Asian currency crisis was one example of how politicians could be punished if their policy backfired, he added.

Edwards was also scathing about those who argued there was no sign of a new house price bubble. This was correct, he said, because unlike in the US, the previous housing bubble never deflated: “It is all one continuous bubble.”

He also took on Bank of England governor Mark Carney’s promise to prevent another housing bubble, pointing to reports of a “red hot housing market” in Canada, where Carney had previously held office.

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Edwards’ comments come soon after a market analyst suggested the government was using rising house prices to boost its re-election chances. 

However, defenders of the government’s policies have seized on news of steady gross mortgage lending in August to argue a housing market bubble has been greatly overstated.