Only two weeks to Hallowe’en, and children will soon be trying to put the frighteners on one another and their folks. But as the days draw in, we are entering a season of scare stories for the grown-ups, too. After a spate of chilling reports from the property market, the housing-crash horror story is back to haunt the nation’s homeowners.

Up and down our property-obsessed land, Britons will soon be transfixed by terror-inducing headlines proclaiming a new era of house-price hell. But will the nightmares turn to reality this time? There is no doubt from recent, compelling evidence that the housing boom is rapidly running out of steam. Nor is there any question that house prices have indeed become significantly overvalued against almost any sensible yardstick.

So it is probable that the market is not only coming off the boil but also is about to feel a nasty chill. It is also quite conceivable that we are embarked on what will turn out to be a substantial, and overdue, correction in property valuations.

That’s the bad news. The good news is that the extent of the market’s overvaluation can be exaggerated easily, while the danger of a full-scale crash - and the wider consequences, should such a housing bust materialise - is generally blown out of any reasonable proportion by hysterical commentary.

Before looking at the reality of the present dangers, it is worth revisiting the evidence that the property boom probably is over for now, mainly thanks to the delayed impact of the five interest rate increases.

The first signs emerged in the August report from the Royal Institution of Chartered Surveyors (RICS), which suggested that average house prices fell that month, with house-hunting activity declining at the fastest pace for three years. RICS then reported this week that the proportion of surveyors detecting falling prices was the highest for two years last month. New mortgage approvals, a reliable indicator of future trends, have also softened significantly, and the regular price survey from Halifax indicated that house prices had dropped by 0.6 per cent last month.

None of this ought to be a surprise. The upward trajectory of prices since the late Nineties has reached implausible levels. The average home is valued at nine times average annual earnings, up from a mere five times as recently as 2001. Not only is affordability badly stretched, but other key props to the market have been removed as well. Growth in incomes after inflation is close to flat. Large question marks have also appeared over the frothy buy-to-let market. All of this leaves it a racing certainty that house price inflation is set to plummet next year from the sort of double-digit rates to which we have become much too accustomed.

The latest City consensus view is for prices to rise by an average of only 2.2 per cent next year. Nor can a crash be ruled out: it is perfectly plausible that prices could fall by the full 20 per cent or so by which they are overvalued, and the chance of a 10 per cent correction must be fairly high.

But these scenarios are not the inevitabilities that some will claim. It is equally likely that the boom could end, not with a big bang, but with a whimper in which house prices barely rise for a prolonged period as greater affordability is restored.

There remain three vital supports that may put a floor under prices in the impending market slowdown.

First, there are still good economic reasons to believe that the longterm “equilibrium” level of house prices should have risen relative to earnings as a world of greater economic stability, with entrenched low inflation and lower interest rates in the longer term, makes higher prices more sustainable.

Secondly, the systematic shortage of supply of property in Britain, thanks to the planning system, should continue to underpin housing valuations.

And thirdly, the combination of a much weaker housing market and a sharp slowdown in the wider economy next year means that interest rates are set to start falling again soon. The Bank of England’s nagging worries over inflation may mean that it is reluctant to make aggressive cuts, and the stimulus to the property market as rates begin to fall may prove less potent than in 2004. Still, cheaper borrowing should still help to shore up the market.

Yet, even if these props fail and prices plunge, this need not spell the economic crisis that the doom-mongers will instantly predict. If prices were to plummet by a fifth, in a worst-case scenario, the scale of the boom since the early Nineties, which has seen prices rise more than threefold, means that the vast majority of homeowners, while left smarting, could absorb the impact pretty readily. Crucially, only a relatively small number of those who bought close to the peak of the boom would face the misery of early-Nineties-style negative equity.

The broader economic impact of a severe fall in prices inevitably would be mitigated by interest rate cuts, so that any recessionary threat would be minimal. For some, there would even be a silver lining to a seemingly bleak prospect. First-time buyers would be able to clamber on to the property ladder, the North-South divide would be eased, and the likely fall in the pound that probably would ensue would boost manufacturing, alleviating the economy’s excessive dependence on debt-fuelled consumption.

A housing crash, while painful, need not be a national catastrophe. So, as the headlines turn to horror this autumn, the advice to most homeowners is: “Don’t have nightmares.”

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