House-Price Nostradamus warns of 2027–28 crash as UK market heads toward 18-year cycle end

A prominent economist who correctly foresaw the 2008 housing crash warns that Britain is on track for a far larger downturn in the coming years, potentially the worst since the global financial crisis. Fred Harrison, known for his 18-year property cycle theory, told This is Money that UK house prices are likely to peak in 2026 before plunging in 2027 and 2028. He estimates a drop of around 20% from current levels, which would recalibrate values to roughly where they stood in the early days of the pandemic.

Harrison’s forecast rests on his long-standing view that the UK economy moves in regular, roughly 18-year cycles that tie housing markets to broader economic tides. He has contended that these cycles are observable in centuries of data and that the most recent cycle has followed the pattern despite shocks like the Covid-19 pandemic. “Since World War Two, the UK—and the global economy—has passed through three business cycles lasting 18 years,” he noted. “The cycles are predictable. They adhere to basic economic theory, and I have tested it against historical evidence.” He adds that the last cycle did not derail, even with extraordinary events, and the next one, he argues, is due now.

The publication of Harrison’s analysis comes as he predicts the timing of the peak and the ensuing decline. Based on his framework, prices may rise modestly into 2026 before turning sharply lower the following year. After the anticipated crash, he expects a period of flatlining rather than a rapid recovery, with no clear signal about when the market might regain momentum. “The downturn between 2027 and 2028 will mark the end of the current 18-year business cycle,” he explained. “This is the fourth 18-year cycle since 1944, but the first one to face multiple threats that eclipse the ’banks too big to fail’ crisis in 2008.” These threats, in Harrison’s view, include geopolitical risks such as Russian tensions, a potential AI-driven market bubble, global warming, and mass migration. He warns that this time the crisis could involve governments deemed “too big to fail” with no reliable bailout in sight.

The core mechanism Harrison cites is land supply. He argues that the fundamental constraint—fixed land—drives price increases when demand grows with population and economic activity. The finite nature of land, combined with speculative zeal, pushes prices beyond what sustainable fundamentals would justify. “The driving force is the unique characteristic of land: they ain’t makin’ any more of it and the supply is fixed in the locations where people want to live or work,” he said. In his view, this combination of land scarcity and speculative demand creates an upward spiral that culminates in a crash when confidence and credit tighten.

Looking back to prior cycles, Harrison notes that the 2008 downturn occurred after a long period of price inflation and escalated borrowing. He emphasizes that in 2008, average house prices in the UK fell by almost 19% from about £175,000 to £142,000, before eventually recovering in the following years. Since that trough, prices have risen roughly 91% to roughly £271,500 by September, according to Land Registry data, illustrating how volatile swings can be over multi-year horizons. Harrison contends that while the magnitude of the next drop is not guaranteed to be identical, his best estimate is about a 20% decline from today’s levels, which would bring typical values back toward the mid- to late-2010s range.

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Some observers question whether there has been a price surge to precede this downturn, a pattern that has featured in previous cycles. Harrison argues that much of the “boom” was already absorbed during the pandemic, with a two-year surge from August 2020 to August 2022, when average prices leapt from around £220,000 to £265,000—about a 20% jump. He says that the pandemic-era uplift was, in his framework, a winner’s curse phase that normally precedes a correction. He notes that price growth in London has already cooled, suggesting the epicenter of any downturn could shift toward regional markets.

He emphasizes that the cycle is not an exact timetable but a historical pattern. After each downturn, he says, the market typically takes about four years to reaccelerate, followed by six or seven years of more modest growth, then a mid-cycle dip of one or two years, and then another growth phase. The end of the cycle, he believes, is when a major shock triggers an extended correction rather than a V-shaped rebound.

What could spark the next crash, Harrison says, is not simple to predict with precision. Still, he argues that the trigger could be a confluence of factors—an AI investments bubble in the United States, warnings from major institutions such as the Bank of England and the IMF, or a broader climate and geopolitical stress that ignites a loss of confidence in asset markets. He cautions that the exact trigger matters less than the timing, noting, “In the end, it doesn’t matter who pulls the trigger. The crash will eclipse 2008.”

In practical terms, Harrison urges a cautious approach for households and investors. His overarching advice is not to chase risk but to prepare for volatility. He warns that inflation could remain high during the downturn, which would erode cash’s purchasing power even as securities falter. While gold has surged in recent months, he cautions that its price may be prohibitive for average savers. The recommended posture, in his view, is to “hunker down,” reduce exposure to high-risk assets, and avoid large, high-leverage bets that could magnify losses during a protracted downturn.

For individuals relying on mortgages or planning purchases, Harrison says timing could materially affect costs and affordability. He suggests borrowers lock in rates well before fixed-term deals expire and emphasizes shopping around with brokers to secure terms that limit future exposure to rising payments. Buyers should avoid stretching themselves financially, particularly if prices are expected to retreat as the cycle ends. Remortgaging opportunities may arise, but he advises weighing the long-term implications of additional loans and fees. Landlords with interest-only mortgages should take extra care to align debt costs with anticipated rent streams, noting that the cost of financing could rise more quickly than rents in a downturn.

The intersection of economics and culture is not new for Harrison. His work has long explored how housing markets influence the everyday lives of families and communities. While his predictions have drawn debate, they have also helped frame conversations about housing affordability, urban development, and the role of government policy in stabilizing markets. As researchers and policymakers evaluate housing strategies in the years ahead, Harrison’s cycle theory provides a historical lens through which to assess potential risks and prepare for a range of outcomes.

Ultimately, Harrison does not claim to predict an exact calendar for every home sale or mortgage decision. Rather, he offers a long-range framework that suggests the next major downturn could arrive in the late 2020s, with a peak preceding it in 2026, followed by a substantial correction and a period of adjustment that could reshape the UK housing market for years. Whether the market follows this script remains to be seen, but the argument that land scarcity, speculative demand, and the timing of cycles are intertwined continues to fuel debate among analysts, homeowners, and policymakers alike.