The economists noted that real house price growth and housing investment worldwide have started to slow having both peaked in 2016.

Real house price growth has slipped to one per cent year-on-year, from four per cent, while housing investment has started to shrink, down 1.4 per cent year-on-year, in the first three months of 2019.

A combined slump of house prices and housing investment in major world economies could cut global growth to a 10-year low of 2.2 per cent by 2020. If it also triggered a tightening in global credit conditions, growth could fall to below two per cent, the report warned.

“Signs of a global house price downturn are already visible, with around a third of our sample of economies seeing falling prices and world residential investment starting to decline,” the economists said.

“High house price valuations add to the risk that this downturn will deepen in the coming quarters, hitting consumer spending.”

Interest rates fall further

If world growth did fall, inflation would remain well below target in the main economies, and interest rates would be likely to drop further as well.

The Oxford Global Economic Model suggested that a 10 per cent fall in house prices and an eight per cent fall in housing investment would cut growth by around 0.3 per cent to 0.4 per cent across regions.

A sharp downturn in China, such as that seen in 2015, would have a further impact on growth in Asia.

The report highlighted that house price valuations across the world’s most developed countries were around 24 per cent higher than would normally be expected.

This is historically consistent with an around 60 per cent chance of real house price falls over the next five years.

And for the most expensive properties, the current valuation is 48 per cent above the long-term average, implying a high chance of price falls over five years.