Government housing market subsidies such as Help to Buy could drive up prices and put first-time buyers at risk, the Organisation for Economic Co-operation and Development (OECD) has warned.
It said UK regulators must be ready to act if the scheme looks like overheating the housing market or undermining affordability by forcing up prices too quickly.
The OECD did praise the "policy induced recovery" in the housing market, and raised the UK's growth forecasts by more than any other G7 country, but warned that Help to Buy needed careful observation.
"The recently established Government 'Help to Buy' property programme needs to be carefully monitored, as planned, and swiftly adjusted if it risks triggering sharp increases in house prices."
The Paris-based think tank added: "Vigorous house price increases could boost wealth and private consumption, but could also undermine affordability and stretch the balance sheet of first-time buyers."
The OECD also repeated its call for the government to build more houses to boost supply and prevent the property market from overheating.
Its figures show UK house prices have climbed 157% since 2000, the seventh biggest rise in the OECD.
The growth trend looks set to continue, with new figures suggesting UK house prices will rise 30% over the next five years, and almost 50% in London.
The OECD isn't the only warning voice raised against Help to Buy. The British Bankers' Association fears the scheme could distort the housing market.
Former Chancellor Lord Lamont fears it will encourage buyers to take on too much debt.
There was good news in the OECD's half-yearly report, which highlighted Britain's brighter growth prospects. It now expects the UK economy to grow by 1.4% this year, up from a prediction of 0.8% in May.
It also forecasts growth of 2.4% in 2014, up from a previous estimate of 1.5%.
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