Teams from the English top-flight have spent in excess of £1 billion since the start of 2015, and spending is expected to rise after the Premier League agreed a new £1.78 billion television rights deal to begin at the start of the 2016-17 season.
Heidel admits Mainz and other German clubs were offered a number of players from the UK during the recent summer transfer window, though he was unable to offer the same wages available in England.
But the 52-year-old feels similar situations will not arise in the coming years as Premier League clubs cannot continue to pay the same amounts of money without consequences.
"That's going to regulate itself. Never have as many players from England been offered to the Bundesliga as this year," he told Bild.
"Everything failed because of the wage demands. In my opinion the English market will collapse in two or three years.
"The English clubs pay insane wages for average players that they aren't able to offload outside of England! The clubs that can afford them aren't interested, the rest can't pay the wages.
"English clubs buy new players every year and the squads are someday going to be too big. I assume that they are going to pay as much in compensation as they pay for new players!"