UK house prices are still “right at the top of the cycle” and could be subject to a painful correction, according to Odey Asset Management founder Crispin Odey.

Odey (pictured) told the Evening Standard this week the UK was in a depression, not a recession, and said house prices needed to fall sharply before the country could begin to recover properly.

The hedge fund manager said property prices could fall by as much as 50%, and pointed to the US as a country which "understood" the need for lower prices.

"Property is ludicrously expensive. House prices are right at the top of their cycle. I think they could crash. I am not saying it will happen immediately, but I do think they can drop by half.

"House prices are not stable. They have a cycle like everything else. America has understood this much earlier than the UK. There, house prices have already fallen by 50% and they are affordable."

Asked if he could see a way out of the current low- or no-growth environment, Odey said the country required a zero interest rate and a housing boom - with credit growth fuelling a restoration of economic strength.

Odey, a donor to the Conservative party, criticised prime minister David Cameron for failing to fully grasp the depths of the UK's economic problems.

"Obviously I am just a simple fund manager but these guys are supposed to be geniuses at numbers, but from where I am standing, they are not [...]I have given up with politics. I do not know who I would vote for now."