Both phases of Chancellor George Osborne’s flagship scheme have now launched and recent house price indices have shown property price rises across much of the country.

Balls, speaking at the Confederation of British Industry annual conference, said he supported the idea behind the scheme but increasing mortgage availability while failing to build more houses would ultimately hinder people trying to purchase their first home.

“We share your concerns about the Chancellor’s current reliance on boosting housing demand through taxpayer-guaranteed mortgages to secure recovery through the Help to Buy scheme, while failing to take action to boost housing supply,” he said.

“The danger is that by boosting demand while failing to build more homes, the Chancellor will deliver an unbalanced recovery and make home ownership even further out of reach for the aspiring first time buyers his scheme should be helping.”

Balls repeated his demand for the Bank of England be given a chance to review the scheme immediately and called for further investment in housing stock.

“That is why we continue to agree with the IMF in urging the government to bring forward £10bn of infrastructure investment this year and next year, which could be used to build 400,000 affordable homes.

“How can it make sense, for example, for a scheme that should be about helping first time buyers to offer taxpayer-backed mortgages on homes worth up to £600,000?”