The property market is becoming a bit of a basket case. Some parts of the country have seen prices rising by almost a fifth in the past 12 months, and gazumping, 20-viewings-in-a-day and sealed bids are making an unwelcome return. Elsewhere the effects have been less dramatic, but prices are starting to take off.
The experts warn that this isn't going to be sustainable - so are house prices about to see a sudden reversal in fortunes?
BoomAzad Zangana, a European Economist with Schroders says that the turning point for the market came with last year's Budget - when the Help To Buy schemes were announced - giving first time buyers new ways of raising enough cash to get onto the housing ladder.
This helped thousands of people to buy, but had a more widespread impact because it boosted confidence in the market. A Halifax study revealed we are now more positive about the future of house prices than any time since their records began in 2011 - and 60% of people think that now is a good time to buy.
This has fed into a surge in prices. According to the Halifax house price index, average UK house prices rose by 8.7% in the first three months of this year - their fastest pace of growth since the autumn of 2007.
Zangana points out that in London the number of people per existing home has risen from 2.35 in 2004 to 2.48 in 2013. In the last three years alone, the stock of residential homes has risen by just 68,000 properties, while the population has grown by a huge 381,000 people – 5.6 times faster than the availability of property.
Can it last?Zangana points out that one problem is the relationship between prices and wages - particularly given that regular wages are almost 8% lower in real terms compared to their peak at the start of 2008, while house prices are recovering at a brisk pace. The Council of Mortgage Lenders says that this means the average person is borrowing 3.33 times their salary - and first time buyers are borrowing almost 3.4 times salary which is incredibly high in historic terms.
At the peak of the market in the middle of 2007, the UK house price-to-earnings ratio hit 5.86, well above the long-run average of 4.1. Now the house price-to-earnings ratio is at 4.8, he says: "suggesting prices are too high once again. By our calculation, prices would need to fall by 15% in order to re-align with average earnings."
However, Zangana doesn't necessarily think this fall is an immediate risk, because mortgages are currently so affordable. He says that the current average mortgage repayment is 27.6% of average household disposable incomes. This is significantly lower than the long-run average of 35.9%, and the peak of 47.7% in 2007.
The overall consensus is that a crash is not around the corner. Robert Gardner, Nationwide's Chief Economist predicts that: "underlying demand is likely to remain robust, as mortgage rates remain close to all-time lows and as consumer confidence improves further on the back of stronger labour market conditions and the brighter economic outlook." The National Institute of Economic and Social Research predicts that house prices will rise 7.8% this year and 4.2% next year.
However, this will not go on indefinitely. The issue will come when mortgages become more expensive - because at some stage the Bank of England will raise interest rates. The question is whether new buyers will still be able to afford their mortgages as interest rates rise, or whether we start seeing the number of delinquent mortgages pick up.
The NIESR predicts that we will see prices simply slow, so that growth is 1.9% in 2016 and static in 2017 and 2018. The Royal Institution of Chartered Surveyors has faith in an even smoother picture - where prices rise on average 6% for the next five years.
Government stepsWhether this rosy view of the future comes to pass depends in part what action the government takes between now and then. It has already acted by bringing in changes to the mortgage market. The Financial Conduct Authority has introduced new tougher mortgage lending rules to stop people being able to get mortgages they cannot afford. More people will be obliged to take advice, where there is a strong emphasis on affordability and in-depth questioning about expenditure as well as an examination of what would happen to household budgets if rates rose.
If the government gets particularly worried that the market is overheating, it could look at removing the stimulus measures - such as Help-to-Buy, although it may be reluctant to do so with a general election around the corner.
The Bank of England will also try to time any rise in interest rates - and make rises small and incremental - so that prices haven't got too out of hand before the bank makes borrowing more expensive
LondonThe right moves may help bring the market to a soft landing. However, whether this is possible in London remains up for debate. In London the effects may be more severe, simply because the numbers are already more extreme. Zangana points out that prices in the capital are currently 6.36 times average earnings; close to the previous peak of 6.41 times and well above their average of 6.18 times.
At the moment average mortgage payments in London are an affordable 39.1% of disposable income; well below the long-run average of 47.4%, and also below the previous peak of 55.8%. A rise in interest rates could do some serious damage in this market.
But what do you think? Are we heading for a crash?