Ed Stansfield (left) and Ray Boulger (right)

The UK has enjoyed the longest sustained rise in house prices since the Second World War. But is the bubble about to burst?

Can property prices continue rising forever, or is a nasty shock around the corner? BBC News Online spoke to two experts with very different views.

Ed Stansfield, property economist at Capital Economics, says house prices will be falling by the middle of next year:

Over the past 12 months, the average house has risen in value by just over �19,000.

Compared to average earnings of just over �25,000, it is little wonder that many people regard property investment as money for nothing.

But the gap between earnings and house prices is now higher than at any time in the post-war period.

Historically, when housing valuations have been so stretched, a sharp housing market slowdown has followed.

We see no reason why things should be different this time.

Optimists point to today's low mortgage interest rates, which mean that interest payments typically absorb a far lower proportion of household income than in the late 1980s.

But interest rates cannot be maintained at current levels indefinitely.

The question is when, not whether, interest rates will rise.

Prices will continue to rise for the next 6-9 months, but will be falling by mid-2004 Ed Stansfield

Besides, appealing to today's low mortgage rates ignores the fact that inflation has fallen along with interest rates, and mortgage interest tax relief has been withdrawn.

On a real, post-tax basis, interest rates look low, but not exceptionally so.

And without high inflation, which rapidly erodes the value of the debt, today's borrowers are shouldering a much larger burden than in the past.

Data from the Council of Mortgage Lenders suggests that first-time buyers are increasingly unable (or unwilling) to get a foot on the property ladder.

The proportion of new mortgages going to first-time buyers was just 30% in July, down from 44% a year earlier.

We believe that, if demand at the bottom end of the market is evaporating, it will only be a matter of time before this impacts further up the chain.

We think that a 20% fall is required to put house prices back on a sustainable footing.

But with house price inflation still in excess of 25% in some regions, it will take time for the momentum in the market to dissipate.

Prices will continue to rise for the next 6-9 months, but will be falling by mid-2004.

Ray Boulger Senior Technical Manager at Charcol mortgage advisers says a crash is unlikely:

A common claim by those forecasting a property crash is that bust always follows a boom, or a bubble as they prefer to call it. But if things were that predictable we would all be millionaires.

The most important single factor influencing the housing market is, without doubt, interest rates.

There have been three periods of significant house price falls over the last 30 years and in each case the principle cause was a very sharp rise in interest rates over a short period of time.

The base rate rose from 7.5% in June 1973 to 13% five months later. Then it doubled from 6.5% in March 1978 to 14% in only 11 months and rose further to 17% by the end of 1979.

Likewise the base rate doubled from 7.375% in May 1988 to 14.875% by the end of 1989.

After the last period of significant price falls, which started in late 1988, the market in London and the South East bottomed out in 1993.

This followed our exit from the ERM in September 1992, as a result of which the base rate fell from the 9.875% then to 5.875% by January 1993.

Subsequent base rate movements have been much less volatile, although post September 11 we saw a sharp drop in the rate.

The increase in house prices over the last decade was kicked off by a sharp fall in interest rates.

I believe it would need the base rate to rise to at least 5.5% before there is a serious risk of house price falls on a national basis, although any increase in interest rates will have a negative influence.

The indications are that inflation and hence interest rates will remain relatively low for the next couple of years and hence I do not see a sharp setback in house prices.