The Big Short is a must-see film for anyone who works in housing. It tells the story of a handful of fund managers and analysts who predicted the crash of 2007/08.

Against all advice these individuals bet short on the mortgage market, in other words they gambled the market would collapse and they would make a killing.

The film showcases the incompetence, corruption and complacency of banks, real estate agents and ratings’ agencies. Some of the most compelling scenes in the film are set in Florida, where homeowners with no visible income are given huge loans and realtors (estate agents) fake mortgage documents.

During this period, Wall Street developed a new product that bundled up thousands of mortgages into a single product called a Collateralised Debt Obligation (CDO), the idea being that risk would be spread across the bundle, because even if a few mortgages failed the rest would still be sound.

These were then sold and re-sold again and again. The problem is that the scale of mortgage failure became so vast that even triple-A rated CDOs became toxic.

When the bubble finally bursts the film’s heroes make millions of dollars, and millions of American homeowners lose their homes. At then end of the film it mentions that Goldman Sachs have now re-launched CDOs under a different name – Bespoke Tranche Opportunities. Here we go again?

Then last week it was disclosed some hedge funds are taking short positions on the shares one of the largest providers of luxury homes in London – Berkeley Homes. In other words they believe there is a decent chance that the luxury London market will collapse.

“History, with all her volumes vast, hath but one page”, said Lord Byron.

On the face of it, all of the elements that could cause a collapse at the top end of London’s housing market are now in place. The gap between wages and house prices in London has been widening for years, and racing ahead of other regions. There is an over-supply at the top end of the market with around 54,000 homes planned or being built in the wealthiest areas of the capital.

I spoke at a conference on the fringes of the city recently and from the seventh floor I could see at least fifty cranes. London has around 250 new tower blocks in the offing, mostly residential. This has all the hallmarks of a bubble.

In addition, the FTSE has seen significant losses, the Chinese economy is stalling, the oil price has dropped through the floor, Russian oligarchs face sanctions and so demand from foreign buyers is stalling.

Changes to stamp duty and buy to let will also impact on the upper ends of the market. Interest rates have also been set at historically low levels since 2009 and many homeowners will have been lulled into complacency. They will be in real trouble if rates increase.

London is another housing country compared to the rest of the UK, containing around 25% of the UK’s housing wealth (housing in the ten riches boroughs is worth as much as all the housing in Wales, Scotland and Northern Ireland put together).

The question is: if the top end of the London market does collapse what will be the impact for those seeking to enter the bottom of the market?

Will falling prices filter all the way down to the bottom and make it easier for first-time buyers?

I am guessing this will depend on whether the looming crash landing is soft or hard, but there must be so much pent-up demand from frustrated first time buyers that the chances of significant price reductions for new entrants will be remote.

However, the sector would be well advised to keep a close eye on what is happening in London right now. Historically, when London’s property market hits the buffers it ripples out across much of the south-east and beyond.