Cabinet minister Ed Balls said today there had "definitely" been a house price bubble in the past two years.
Cabinet minister Ed Balls said today there had "definitely" been a house price bubble in the past two years.
The Children and Schools Secretary, a former Treasury minister and adviser, added that it was still unclear what the real value of homes was.
In a pre-recorded interview with the BBC Radio 4 Today programme, Mr Balls said people had learnt in the late 1980s and early 1990s that prices went down as well as up.
But he said there was also supply-and-demand economics to be taken into account.
"There was a pretty strong view that we had a growing demand for housing in this country and a rising population, but we had much lower levels of house building than we've seen in previous generations," he said.
"So we don't quite know where the equilibrium is going to end up in terms of house prices but clearly they have fallen sharply over the last year from those heady heights."
The Prime Minister, Gordon Brown, has predicted that the housing market will bounce back quicker in the UK than in the US where, he argues, too many homes have been built.
