Professor James Mitchell of Warwick University business school claimed that UK  residential property is already experiencing a ‘price bubble’ with property prices in 10 of the UK’s 13 regions already higher than they should be.

Mitchell’s research concluded that only Northern Ireland, Scotland and the East of England are home to realistic property values, and that ondon is hyper-inflated with prices on the verge of collapse.

After London, Wales was the most likely region to be in the middle of a house price bubble with an 83% probability followed by the North West at 80%. The South West and North East share a 77% probability; while the West Midlands has a 72% probability. The South East, meanwhile, has a 65% probability, similar to Yorkshire (67%) and East Midlands (66%)

“The results raise the risk, although not the certainty, that house prices will fall, although predicting the timing and manner of any fall is even harder than identifying the presence of a bubble,” he said.

“But a bubble it appears to be and we should all – householders, business people and policymakers alike – be alert to this risk.

Mitchell pointed the finger at the government, which he accuses of gambling Britain’s economic recovery on rising house prices ‘using borrowed money.’

“It is possible that rising house prices, by increasing economic confidence, lead to a more balanced recovery with more business investment, but it’s a gamble using borrowed money.”  

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