House price prophet predicts 2026 peak, 2027–28 crash in UK market

A veteran British economist is warning of a looming housing market crisis that he says could be the worst since the 2008 financial meltdown. Fred Harrison, author and proponent of an 18-year property cycle, told This is Money that UK house prices are expected to top out in 2026 before sliding in 2027 and 2028. He forecasts a roughly 20% drop in values across the country, with a downturn that could eclipse the severity of the 2008 crash.

Harrison has built his public reputation on the premise that the property market moves in long, predictable cycles. He maintains that the UK economy has traced an 18-year pattern since World War II, with sets of peaks and troughs repeating over centuries. He argues the most recent cycle has not deviated from the pattern, despite major shocks such as the Covid-19 pandemic, and that the next downturn is now due. According to his analysis, the 18-year cycle produced a peak around 1989–1990 followed by a recession, and then a peak in 2007 followed by the 2008 crash. He contends the cycle remains intact and points to its four-phase rhythm: an initial crash, about four years of recovery, six to seven years of steady growth, a mid-cycle dip, and another growth phase before the next downturn.

Based on this framework, Harrison says the next crash would take place in 2027 and endure through 2028. He suggests prices may edge higher into 2026, then begin a downward slide the following year, eventually flatlining for an extended period as the cycle resets. He argues the downturn could be severe enough to redefine the UK housing market for years to come, even for those who have experienced downturns before.

In historical terms, he notes that the 2008 crisis saw average UK house prices fall by about 19% from peak to trough. He also points to the pandemic-era run-up in prices as a distinctive feature of this cycle. Between August 2020 and August 2022, average prices reportedly jumped by around 20%, a surge he says did not precede a typical pre-crash boom but rather occurred during the pandemic period. He argues that the apparent post-2020 uplift was effectively captured during Covid-era conditions, with some regional markets—including London—already showing signs of cooling.

London, in particular, is highlighted as a potential early indicator of the coming downturn. Harrison argues that the capital may have hit a peak earlier than the rest of the country, with price declines already visible in the capital before a broader national pullback intensifies in the following years.

What drives the 18-year cycle, he says, is the fundamental constraint on land supply. Land is finite in desirable locations, and as populations grow and the economy expands, demand for housing pushes prices higher. This is amplified by speculative behavior that can propel prices beyond sustainable levels. The core dynamic, he adds, is the fact that land cannot be manufactured, so demand increasingly chases scarce sites, reinforcing a cycle that ends in a price correction.

The catalyst for the next crash is uncertain, Harrison notes. A trigger could be any number of events, including a new wave of speculative excess in the artificial intelligence sector or wider equity market froth. He points to warnings from major institutions about AI bubbles and to investor concerns over riskier tech valuations. He also suggests the crisis could unfold as governments confront the failures of big financial institutions with no easy bailout option, potentially making the downturn more disruptive than 2008.

If the scenario unfolds as he predicts, the downturn would likely be accompanied by a broader global economic crisis, with job losses, slower productivity, and reduced consumer spending. That environment would, in turn, dampen savings and investment in assets, reinforcing the price correction across housing and other markets.

Harrison emphasizes that investors and homeowners should avoid panicking or pursuing aggressive risk-taking in the near term. He recommends focusing on capital preservation, recognizing that traditional stores of value may also face inflationary pressure. He cautions that cash may lose purchasing power in a high-inflation environment, while gold’s price has already surged significantly, potentially limiting its accessibility for the average saver. The prudent approach, he says, is to reduce exposure to high-risk assets and prepare for a prolonged period of market turbulence before any recovery.

For those with mortgages, Harrison advises exploring refinancing options sooner rather than later. Locking in rates ahead of renewed deals can help borrowers avoid escalation in monthly payments if rates rise further. He notes that many lenders permit fees to be rolled into the loan, but borrowers should weigh the long-term cost of adding fees to the principal against potential rate savings. In the housing market for buyers, he urges restraint and careful budgeting, given the likelihood of price declines and tighter lending conditions as the cycle progresses. Buy-to-let investors should also plan ahead, recognizing that higher costs could alter the economics of leveraged property investments.

Overall, the economist maintains that the best preparation is to minimize exposure to sudden, high-risk moves. While inflation remains a concern and cash can lose value in real terms, a cautious, long-horizon strategy may help households weather a period of profound market adjustment. As Harrison sees it, the coming years will test the resilience of UK housing and the wider economy, with the 18-year cycle offering a framework to interpret the next phase even as exact timings and magnitudes remain uncertain.