Lib Dems in property crash warning

Deputy leader Vince Cable said a decade of mismanagement by Gordon Brown had led to a "collective madness" around house prices which threatened to derail the economy.

Speaking at the party's conference in Brighton, he lambasted the "professional optimists" who had convinced the public that values could keep going up for ever.

"History tells us that bubbles burst; and every housing boom is followed by a crash whatever the papers say," he insisted.

Mr Cable laid the blame for the crisis squarely at the door of Mr Brown, saying that he had done nothing to prevent the housing market overheating during his 10 years as Chancellor, and now "chickens were coming home to roost".

History demonstrated that the housing "bubble" had to come to an end, he insisted.

"I deeply distrust the professional optimists - the banks, estate agents, government ministers - who seem to believe in an economic version of levitation," Mr Cable told delegates.

"This is something Gordon Brown understood ten years ago when he said in his first budget: 'I will not allow house prices to get out of control and put at risk the sustainability of recovery.' But that is exactly what he did. Why? Why did he exclude housing from the measure of inflation? Why did he not give the Bank of England responsibility for this, the most important and destabilising element in inflation?

"Why has he taken 10 years to produce a housing policy? Why was council and other social housing drastically curtailed forcing families into owner-occupation they cannot afford? Why was he so frightened of tackling the banks over debt promotion, unfair charges and irresponsible lending?

"As long as the boom has gone on, he has been able to avoid answering these questions but his day of reckoning cannot be far off."