Property experts warn that a house price crash is coming – here's why

House prices are at a record high, but how long will it last?

The latest Halifax House Price Index revealed that UK house prices are continuing to rise, breaking every record going. However, property experts and economists warn that the house price bubble is due to burst in the next few years.

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The latest rate of annual house price growth, at 9.5 per cent, is the highest in seven years, with the average price of a UK house now standing at £261,743. The housing market has defied all expectations, with many property experts starting to sound like scratched records saying the crash is coming.

'These trends, coupled with growing confidence in a more rapid recovery in economic activity if restrictions continue to be eased, are likely to support house prices for some time to come, particularly given the continued shortage of properties for sale,' says Russell Galley, Managing Director of Halifax.

However, property experts are warning homeowners not to become complacent as many are still predicting that a property market bust is certainly on the horizon.

The 18-year property cycle theory

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One of the most vocal voices predicting a certain house price crash a few years from now is the visionary author and economist Fred Harrison. Harrison has successfully predicted the housing market crashes of 1990 and 2008, drawing conclusions from data from the past 300 years.

Harrison took a business trends analysis from 1930s Chicago as his model and tested it against economic events in countries as diverse as Australia and Japan. He then applied it to the UK housing market, which has resulted in the eerily accurate predictions of the market crashes that have come to pass. Harrison's latest prediction, outlined in his book We Are Rent, is that UK house prices will crash in 2026 and will be followed by an even worse economic depression than the financial crisis of 2008.

The view from property experts

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Harrison's view may seem overly pessimistic, and estate agents are normally wary of making predictions on this scale, especially if they are negative. However, some voices in the real estate business are already voicing concerns about the aftermath of the government's artificial propping up of the housing market with the stamp duty holiday and other measures like that recent mortgage guarantee scheme.

Martin Lewis was one of the first and most outspoken opponents of measures that seem to benefit the housing market more than they do the longer-term needs of homeowners. Matthew Cooper, Founder & Managing Director of Yes Homebuyers, chimes in: 'Enjoy the boom while it lasts because if history has taught us anything, a bust is likely to follow. The government’s insistence on artificially fuelling house prices, not only with a stamp duty holiday extension but now in the form of 95% mortgages and a rehash of the Help to Buy scheme, is irresponsible, to say the least.'

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Cooper goes as far as to say that 'with the market already buckling under the pressure, it’s only a matter of time before it gives in, bringing property values down with it.'

Leading lettings and sales agent, Benham and Reeves have proof that all is not as well as it seems with the property market. They point out that even before the March 2021 stamp duty holiday deadline, UK homeowners were overpricing their properties by an average of 21 per cent, with sold prices markedly different from expectations.

Related: Beware FON - snag a deal on a new home with these expert house price negotiating tips

Fred Harrisons stark warning of a crash is currently five years away. So we'll just have to wait and see if these warnings become a reality.

Anna Cottrell is Consumer Editor across Future's home brands. She moved to the world of interiors from academic research in the field of English Literature and photography. She is the author of London Writing of the 1930s and has a passion for contemporary home decor and gardening.