Employment figures are a lagging indicator. People are simply stuffed to the eyeballs with debt and as credit card firms and unsecured lenders have tightened criteria, it's inevitable that once the tills stop ringing, the P45s will start winging their way to a letterbox near you.

I might've agreed on the author's comments on negative equity were it not for the fact that anecdotes abound where vendors have achieved well over 10-15% over asking following sealed bids and aggressive bidding wars.

Forget LTVs - there are COUNTLESS instances of people telling bald-faced lies and fabricating payslips to get mortgages. Repossessions and bankruptcies have doubled and that's even before the crunch - this is going to get very, very ugly . . .

There is no soft-landing - head for the exits now

Ray, London,

Of course there isn't going to be a crash. Everything will be OK. No need to panic. So say the soothing voices. And just look at the turkeys: less than four weeks to Christmas, and are they panicking?

Face it folks, money is just debt. And too much debt is a big problem - for someone. After all, the only things of real value in our society are the roofs over our heads, the clothes on our backs and the food on our tables. If you own these, then fine. If you have to buy or rent them - and having a mortgage is just renting from a bank - then you are liable to be a victim of the big problem.

Brian, Worcester,

'Once again an article on house prices attracts all the malcontents who are jealous of the homeowning classes. Stop moaning and get a better paid job.'

Gareth, London,

Hmm..house prices at 7-9 times AVERAGE salary...demands for better pay...inflation... higher risk of recession...Gareth's fantastic idea of having more people earning above 'average' seems flawed to me...

Dan, Oxford, England

If UK houses cost 9x the average salary, could we suggest average salaries are TOO LOW???. Perhaps we are underpaid, as a nation, with cheap luxury goods, produced for pennies in the Asian megafactories, and grossly overpriced basic necessities like houses, petrol, and finanical services?.

Augustus Blear, Langport, Somerset, UK

A 70% fall is what is needed. Clear it all out of the system and stop paying banks half our net earnings. If your mortgage is too high just throw the keys back- or negotiate. I'm off to the Far East it's not worth the wait to buy.

pete, reading,

Jem,

I think you would be staggered if you knew the true cost to building a house.

They are well over the top and not worth it. How can they treble in 10 years and still be worth it?

Mick, Gold Coast, Australia

Its about time Deejay from Reading went back to school to learn some basic maths as he wouldn't pass a GCSE exam.6 X income at 6% is the same as 3.5 X income at 15%?A mortgage is for around 25 years and rates were only at 15% for a short time and were at their peak.Is 6% the peak for the next 25 years?Remember,inflation is now low compared to the 70's and 80's so paying off the capital is far more expensive.Maybe this is why the UK has a 1.34 trillion pound debt problem.

steve, Eure, France

I cant beleive people are still harping on about a crash and saying how bad it would be. Joe Bloggs who bought his house ten years ago has seen it rise by 300% and it may drop 10-15 %..do you think he will be bothered...no.

Most people buy a house to live in it and it wont affect them, anyone who bought recently at high prices should have been studying the news.

An average house cost 9 times the average salary which says it all....houses are over priced..!!!

House price correction, slump, crash what ever you call it, it needs to happen.

Mick, Gold Coast, Australia

firstly, darren... it's not speculators who will lose out, it is regular home-owners who lose their jobs and are forced to sell at the worst time possible. and we should have sympathy. the idea that the whole market is driven by buy-to-let is a myth.

secondly, whilst I agree with the general tone of the article, I have to say that I would consider a 10% drop in property values absolutely to be a shocking crash. houses are not overvalued if buyers pay the prices they pay. the rises may be unsustainable, given relatively low rises in incomes, but that's not the same thing. buyers may no be limited by lower lending multiples, but prices being out of line with wage inflation will not of itself cause a crash.

I feel if there is a fall over the next year, it will be slight. 10% seems unlikely.

jem, london , uk

I have often read over the last few weeks that there will not be a crash "because unemployment is low".

Last time in the UK (1989 crash in property prices), unemployment continued to fall after prices slumped. Unemployment came later.

In the USA, unemployment has continued to fall and the economy grown, while property prices fall.

In Ireland, unemployment has remained low and the economy grown, while property prices fall.

In Finland 1989 (one of the biggest property crashes in history), unemployment came after the property crash.

Do I need to continue?

T Sparks, Limerick,

To Dave D Ubious

As a mortgage professional for the last 30 years I can assure you that, despite Northern Rock's "125%" scheme, average mortgage advances are as a percentage, substantially lower than during the late 1980s. The majority of first time buyers have, over recent years, been putting down larger deposits than ever. The Bank of Mum & Dad have come to the aid of huge numbers of youngsters. It's all very well quoting theory but, in the real world, 125% advances are only available on properties costing £100k or less (not many of those in my neck of the woods).

Regulation of the mortgage market has meant that affordability is taken seriously and borrowers are told of the likely cost once their 2 year fixed rate comes to an end.

6X income is available but not generally to typical FTBs.
Tell me this, Is 6X income at 6% more or less affordable than 3.5X income at 15%? Do the math.

It's middle aged parents who've been funding the boom.

Deejay, Reading,

Once again an article on house prices attracts all the malcontents who are jealous of the homeowning classes. Stop moaning and get a better paid job.

Gareth, London,

Contradictory and inaccurate - as others have commented, to say that prices cannot fall because LTVs are conservative is circular logic. If the V in LTV is far too high - and the piece later states that the average price is 9 times average earnings - then the value is nonsense and the LTV meaningless. If prices should be only say 5 times earnings, then simplistically prices should fall by 56%. That's a crash. Look at japan - despite negative real interst rates, house prices are 40-60% below their peak without mass unemployment. People have been using "wooden dollars" to trade houses for five years at least, and have fooled themselves that they are becoming rich simply by owning property. Those who don't own property have had to generate more and more real wealth to try and get on the property ladder - thats a real and dangerous disconnect and could easlily end in a severe crash if unemployment edges up and growth slows but inflation keeps rising.

Tim, London,

Inflation should prevent any fall in interest rates...but we are talking about a goverment for who image is everything.
So almost anything can happen.

michael clarke, windsor, UK

Just look at the figures to see that a soft landing, correction or whatever you want to call it, just isn't happening.

Advances for new house purchases are down 31% year on year!

This may not have been reflected in prices yet, but it will. Anyone who argues othewise is deluding themselves.

Dave Ross, London,

Interest rates down? Shortage of money in the market is pushing rates up, already, no?

However, I agree, no panic necessary, but the correction will shake out those, banks included, who have not learnt the elements of economics: You cannot spend what you do not have.

Coen van Wyk, Pretoria, South Africa

Some of these comments are too harsh. James is correct, whilst employment stays high and interest rates low it is likely there will be a housing correction rather than a crash. However the true impact of the credit crunch on our largely service economy is still not clear. Most UK growth in the last 10 years has occurred because of debt-led consumption. If that slows significantly then unemployment may begin to grow.

Gerry Lynch, Chichester, UK

Isn't it normally better when things go down in price than up?

A crash can't come soon enough for those young people who want a home for their families.

The property market must fall. The speculators who have helped price the young out of the market will lose out. Most will give them no sympathy.

You cannot run an economy on debt.

Darren, Cheltenham,

If houses had gone up at just above inflation we could expect a correction. Instead they have gone up rapidly compared to inflation and wage increases. Recent events at banks will change everything.

House prices will come thundering down very rapidly because buyer's deposits will be inadequate, high mortgages will be very hard to obtain and buyers will realise it is best to wait a few years until the storm clouds dissapear. Buy to let is fast going out of fashion and will become a very expensive hobby!

Kevin Herbert, Greater Manchester, UK

No, crash not correction. Sound fundamentals have evaporated like smoke from a musket in a swift breeze. I'm with the banks, I think it's going to be a crash.

The strongest growth for 200 years largely based upon consumer retail expenditure derived from loans secured on rising property valves do not a sound economy make.

Even one sufficiently gullible to believe the Government statistics on unemployment and inflation cannot overlook an economy based upon benefit sustained employment, high inflation and ever increasing mountain of UK Government debt .

charlie, wolverhampton, UK

"..value of British homes will not be slashed by a third in the coming year...prices may fall by 10 per cent". It is true that nominal house prices tend to be "sticky" with homeowners tending to stay put rather realise capital loses. A 10% year on year fall actually sounds quite dramatic. In the previous downturn nominal year on year falls never got out of the single digits. Even with high inflation it still took 7 years for real prices to bottom out. This time around with even more extreme valuations and lower inflation I think the risk is that it will take much longer for the real value of homes to be eroded. I think it is foolish to adhere to the mantra of long term investing at all costs - contrast this with the maxim "buy low sell high". Get out while you still can.

jake, London,

""A repeat of the negative equity blight is unlikely because, despite the concerns about reckless lenders, banks and building societies have been more conservative in managing loan-to-value ratios than they were in the late1980s."

As Dave said above, shockingly inaccurate. The fact that LTVs are higher now, as are the imaginary values, implies from your own logic that negative equity is more likely than it was in the last bust (which is about to be repeated soon, on a bigger scale).

Ian Atkins, Bern, Switzerland

Most people sitting out the "correction" at home will not be the ones who determine the market. It will be the forced sellers, at the margins who will determine the market.

Dawn Scott, Ipswich,

A long way off the mark. How are you so sure interest rates will fall? What is the outlook for inflation - UK is an open economy and the emerging markets now compete with us for commodities. Throw in the potential for a fall in Sterling and BoE's scope for cuts is limited.

Sentiment is also very powerful. The BTL community will look at the prospect of a 10% fall in their investment. Even if base rates did fall, LIBOR has gone up substantially - and all this at a time when rental yields do not even cover borrowing costs. So why shouldn't the BTL community move towards the exit sign in lock step?

Add in the outlook for GDP (consumption / govt spending both peaked out and exports hardly in fine fettle) and "stagflation" looms.

The media with TV programmes and by quoting Charcol representatives ad nauseam has been guilty of talking UP the housing market.

So time for a bit of rebalancing

Rob, Warsaw, Poland

"A repeat of the negative equity blight is unlikely because, despite the concerns about reckless lenders, banks and building societies have been more conservative in managing loan-to-value ratios than they were in the late1980s."

And exactly how would the late 80's LTV deals compare to, say, Northern Rocks 125% mortgages ? That's hardly conservative in any man's language.
Even the now common interest only mortgages put a buyer in negative equity instantly in a market that falls even slightly.

This argument for lack of negative equity seems pretty weak to me, to say the least

Dave D. Ubious, london,

Oh come on Mr Harding. "Talking down the housing market". For how many years has everybody, economists, estate agents, homeowners, been talking UP the property market? To a level which makes huge profits for all those in a position to benefit, and a hammer blow to those people left behind.

I vote the expression "strong house price growth" be outlawed. About time we thought of housing for anybody hardworking to be able to buy a "home", not a money-making vehicle.

Dominic, Holloway, UK