The chief UK economist at Morgan Stanley investment bank has warned that property prices could plummet within two years.
David Miles, who reviewed the mortgage market for the Treasury in 2003, said: "A substantial fall in real house prices is likely at some point in the relatively near future, though it could be one to two years away."
He argues that "significant falls in real house prices are needed relatively soon to match demand to supply," attributing one third to one half of house price growth to "changes in expected house price inflation … a speculative element of demand, which is likely to be volatile".
But Martin Ellis, Halifax chief economist, told the Independent he disagreed with Mr Miles' conclusions, emphasising the impact of "fundamentals" on the rise in house prices.
"The economy has been growing, the labour market is strong, and unemployment and interest rates are low while housing supply has lagged demand," he said.
"I think prices are well underpinned although we do expect the housing market to slow," Mr Ellis concluded.
Figures released by property website Rightmove yesterday revealed that house prices rose at their fastest annual pace in two years between October and NovemberFor more information about UK property, click here.
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