House prices to rise 20% before crashing in 2026 says property prophet (2024)

The house price prophet who predicted the last two property crashes years before they happened has warned of another impending boom and bust on the horizon.

Fred Harrison, a British author and economic commentator famous for his theory of an 18-year property cycle, is predicting turbulent years ahead for the housing market.

Speaking to This is Money, Harrison said house prices are about to boom once more.

He expects the average UK house price to rise by around 20 per cent between now and the end of 2026.

However, Harrison is then expecting a big crash to take place, with any gains made over the next two-and-a-half years wiped out entirely.

Hebelieves Covid-19 caused house prices to rise higher and faster than they would have otherwise done.

That is due to factors such as the 2021 stamp duty land tax holiday inflating property prices, as many sellers simply added extra to the asking price of their homes.

The pandemic also caused a flurry of property transactions as many buyers sought homes they could work from comfortably, or with gardens.

The past year or so of house price dips has merely been arecalibration, Harrison says - and now the housing market is ready to continue its upwards trajectory.

'Prices are not dropping,' says Harrison, 'they are adjusting back on to the long-term upward trend, after the pandemic induced boom.

'They will continue to glide upwards to the end of 2026.

'Between now and then house prices will begin to rocket, and if history repeats itself then the rise will equate to 20 per cent or so above current levels.'

Harrison is expecting politics to provide the fuel to send house prices hurtling higher - both here and in the US.

'The general elections in the UK, reinforced by the presidential election in the USA, will ensure benign policies for house prices,' he says.

'Politicians will do their utmost to accommodate property owners. In the UK, all political parties have fine-tuned their policies so as not to damage the prospect of the coming boom.

'If Donald Trump wins in November, major tax cuts will quickly follow. Those cuts will be capitalised into home prices.

'This will help to elevate confidence in global markets, giving a further push to property prices.'

'As with the financial crisis in 2008, following the peak in 2007, it will end in tears.'

Harrison is also adamant that mortgage rates will likely continue to fall, which will encourage investors, first-time buyers and home movers to push forward with plans.

'Mortgage rates will go down'

Mortgage rates have broadly been on a downward trajectory since August when rates peaked - and this is a trend that Harrisonbelieves will continue.

He says: 'Treasuries on both sides of the Atlantic will do their utmost to keep interest rates on a downward trend.That will further reinforce the rise in house prices.'

He adds: 'A Labour Government would push for an increase in construction, which will persuade people that all is well in the property markets.

'So more people will take out the forever 40-year mortgages with a growing sense that prices are heading in the right direction. In a rising market people will borrow at whatever interest rate.'

But with every boom, there must eventually come a bust.

Harrison is almost certain that this will come in late 2026 - and the only potential obstacle that could upset his timeline is war.

He says: 'The crash in house prices is slated for 2026 - subject to no further military adventures in the Middle East and assuming Putin does not provoke Nato in Europe.'

'President Xi threatens to retake Taiwan in 2027, but house prices will have peaked by then, anyway.'

He believes the next downturn could eclipse any house crash we have seen in the past.

He explains: 'The economic crash will cause the convergence of the existential crises threatening our globalised society.

'If my worst fears are realised, there is no telling where the bottom will be in the housing market.'

So should you trust Fred Harrison?

Forecasting future house prices is a difficult business. Many have tried and failed in the past.

But while Harrison's views may seem far fetched to some people, he does have an uncanny knack for predicting house price crashes.

In his book, The Power in the Land, published in 1983, Harrison correctly forecast property prices would peak in 1989, as well as the recession that followed it.

In 2005, he published Boom Bust: House Prices, Banking and the Depression of 2010, in which he successfully forecast the 2007 peak in house prices and ensuing depression.

According to Harrison, he had already predicted the 2008 crash at least a decade before.

When This is Money spoke to Harrison in 2021 he told us that he warned the then-Labour Government of the 2008 crash in 1997.

Harrison says he has sent a similar message to current Labour leader Keir Starmer, in expectation that Labour will be victorious in the upcoming general election. However, heexpects his advice will not be heeded once again.

He adds: 'I have written to Keir Starmer, to alert him to the prospects. Does he really want Labour to take the blame for another economic crash?Not surprisingly, the response was non-committal.'

'That was a repeat performance of my attempts to warn Tony Blair and Gordon Brown, when they entered Downing Street in 1997.

'I wrote to warn them that they had 10 years to ring-fence the UK economy against the crash that would follow the peak in house prices in 2007. They did nothing.'