If there’s another bubble, the Bank of England and the government “have means by which we can anticipate that and make sure it doesn’t happen again,” Mr Clegg told the BBC.
Britain is nowhere near yet the peak of that un-sustainable housing bubble, he said.
The Bank of England’s Financial Policy Committee holds its quarterly meeting on Wednesday, to scrutinise potential financial stability concerns, less than a week after law-makers questioned governor Mark Carney on the risk of an unsustainable housing market boom.
Chancellor of the exchequer George Osborne’s ‘Help to Buy’ programme, which helps boost deposits for homebuyers, has drawn warnings from the IMF and UK business secretary Vince Cable for potentially driving up prices.
“We need to be vigilant and, of course, we’re going to be vigilant,” said Mr Clegg, who was attending his Liberal Democrat party’s annual conference in Glasgow.
“We’ve started the painstaking job of building more houses. The great crisis in housing in Britain for years is we simply don’t build enough new houses and we don’t build enough affordable houses.”
Help to Buy is designed to let cash-strapped buyers purchase a home with a deposit of as little as 5%. The first phase — interest-free loans for buyers of newly built homes — began in April and has already stoked the strongest housing market since the financial crisis.
Guarantees meant to spur £130bn (€155bn) of mortgage lending will be available for all homes starting in January.
Tim Farron, the Liberal Democrat president, also criticised the programme in a speech to party members in Glasgow on Saturday, that attacked policies advocated by Osborne and other ministers from their Conservative coalition partners.
“Only the complacent would think that we’re out of the woods, and there’s some who seem content to steer us straight back into those woods,” he said.
“We still face the danger of a reinflating housing market, unsustainable growth fed by cheap credit and real growth thwarted for want of skills.”
Mr Clegg said “mortgage approvals are about half of what they were at the peak.”
While “there are parts of the housing market — particularly in London and central London — that are booming,” that isn’t the case in other parts of the country”.
His words were echoed by another senior Liberal Democrat minister, chief secretary to the treasury Danny Alexander, who told Sky News that “we’re a thousand miles away from a housing bubble in the UK”.
Recent property-market data suggested UK house prices are increasing. A report by Acadametrics showed that British house prices rose to a record last month.
In London, prices have risen 40% from their trough in Apr 2009, compared with 16% nationally.
Mark Carney told lawmakers, last week, that while the UK housing market is improving, activity levels, mortgage applications and valuations are still low.
He also said prices will continue to increase, and the Financial Policy Committee will be vigilant.