Property market bubble to burst

Economist David Miles, chief UK economist for investment bank Morgan Stanley and former advisor to Gordon Brown, has warned that a housing crash is likely in the near future.

'A sharp fall in real house prices is likely at some point in the relatively near future, though it could yet be one to two years away,' his report concludes.

He believes that while just under half of the rise in prices is fuelled by population and income growth, a little over half the rise is driven by speculation that prices will continue to rise rapidly. But these prices are a "bubble", which will deflate rapidly once price rises fail to meet expectations.