Mr Osborne said recent data showed house prices had “barely grown”, adding: “Let’s not pretend there’s a housing boom.”
The chancellor’s assurances follow concerns expressed by Business Secretary Vince Cable that the government’s help to buy scheme could result in a housing bubble.
Speaking at the Institute of Directors annual convention, George Osborne said: “If you look at the actual data on housing at the moment, for example, transactions between firms are a third of what they were, mortgage agreements are half of what they were.
“Of course, outside London and the middle of London where we are today, even on the latest data this week, house prices have barely grown.
‘Alert to the risks’
“So I would say, let’s be alert to the risks, but let’s not pretend there’s a housing boom and let’s go on trying to fix specific problems in our financial system.”
Figures from the Office for National Statistics, published on Tuesday, show that house prices in London have risen by nearly 10 per cent in the last year.
House prices in London and the south east are now past their 2008 peaks, with averages of £438,000 and £303,000 respectively.
But across England, prices have risen at a more modest rate of 3.7 per cent. In Scotland, Northern Ireland and Wales, there were rises of 2 per, 1.8 per cent and 0.7 per cent.