Britain is on the verge of a dangerous housing bubble, the Treasury’s chief watchdog warned yesterday.

Soaring property prices are being inflated by speculators banking on further gains, said Robert Chote, who heads the Office for Budget Responsibility.

He told MPs: “With very rapid house price increases in some parts of the country, you might see bubbly activity where people are willing to buy stuff off-plan or not intend to live in it.”

Prince Charles gave a separate warning yesterday that soaring property prices in London will drive a generation of young people out of the capital.

Meanwhile, it has been revealed that more than 17,000 homes were bought under the Help to Buy scheme in its first nine months, according to the latest figures.

The statistics show that 88% of the 17,395 were first-time buyers, and that 77% of the homes bought were outside London and the south-east. The average value of a property bought via the scheme was £194,992.

The large majority of the purchases – nearly 15,000 – were made through the older shared equity loan part of the scheme, available on new homes only. This part of the scheme launched in England in April last year. (In Scotland it was September, and in Wales it was January.)

The mortgage guarantee part of the scheme, available on both old and new properties, began across the UK last October and will run until the end of 2016.

The shared equity side of Help to Buy has been extended until 2020, the Chancellor, George Osborne, announced in last week’s Budget.

The average value of a property bought with the mortgage guarantee was £148,048, and £203,137 with the shared equity loan.