Prices must fall - just look at the facts - prices are on very fancy multiples of earnings. The government has promised to push policy to build more - and surely it must be desparate for one success after all the failures in public spending. The changes next year to capital gains taper relief means that many buy to let investors of long standing have a chance to bail out of the market and still keep a good proportion of their gains, this will put more pressure on recent BTL investors who have entered the market at far higher rates and find that the rent does not cover the mortgage payments, while their capital gains are withering away. First time buyers with any sense will watch as prices fade and may still have difficulty in finding those very generous mortgages of 2006. It may take some time but I'm sure the price falls will gather momentum until houses are within normal ranges.

Diddly do, Liverpool,

The comment someone made that house prices were over valued in 2001 sums it all up.Nothing else to say for now.

Stephen Hulton, Eure, France

Is it already happening outside the SE and London? Some friends who bought 5 years ago recently had their property valued as they wanted to remortgage so they could pay for an extension and improvements. They bought for £220k and assumed, because of all the huff and bluster headlines - "property prices rise 20%, etc - that they were sitting on at least £340k (they assumed roughly 20% increase in value year on year). To their dismay, the property was valued at £250k. It's a tidy return, admittedly, and not a loss, but it's not anywhere near what they were expecting, and probably only just covers the interest they're paying. I suspect this is an attitude typical of many (new) home owners who have swallowed press articles reporting average national % increases hook, line, and sinker because it suits them to hear their house is worth. What they're not getting is that a UK average does not reflect local market conditions. The crash is coming, and my cash is ready and waiting to buy..

Lucy, Greater Manchester, UK

40-60% seems reasonable to me. All those who figure property is a one way bet need look no further than Japan. 20 years of falls and even with interest rates at 0% deflation was still rampant. Jackboy, London doesn't seem to understand that 120% loan to value on 8-10x earnings multiples with a fixed two year teaser rate before reset is exactly what sub-prime is. Or does he think the tax burden is somehow going to decrease. The government will service their appalling debt before they let you sort out yours.Buy to let landlords who are currently only making 4% yields will be in for a shock. New landlords will be able to offer cheaper rents because they have more manageable mortgages to service. People have got too used to the idea that houses create wealth. As a result UK savings rates have fallen and the equity in houses has been withdrawn to spend on cheap imported goods. Too many people have been living beyond their means on debt fueled spending spree. You can't eat or wear a house.

Edward, London,

at the end of the day it is down to the individual, and your view. A correction needed? probably. doom and gloom? short term or long term. Short term, i think investors may have missed the wave. Long term, well if you have a 20 year view, you are not really going to lose money. Pay rent till it crashes, and you are spending money for no reason. My parents bought a house 30 years ago for 9000 quid.

James, HK,

This is one of those "is the Pope a Catholic" type statements. It's not now a matter of "if" but a matter of "when".

Personally, having paid off my mortgage years ago I'm really looking forward to it. It will shatter Brown's image as the best ever Chancellor and without house price inflation the real economic growth figures will be finally revealed.

Scamp, Aberdeenshire,

It was obvious that UK house prices were going to fall,there isn't a single reason why they should rise in the next few years.The only reason that some people still believe they are going to rise is because they are afraid of facing up the blunt economic facts and are, effectively living in dreamland,not reality.If wage inflation is 2 %,no lets be optimistic,3% and houses are already 9 times earnings,interest rates are rising due to inlationary pressueres,banks are lending less money,who is going to pay for these price rises.Where is the money coming from?People just think that the next 5 years will be like the last.Economies go in cycles,not straight lines.

Stephen Hulton, Eure, France

House prices are not 'crashing' and £500K houses will not be worth £200K in 2 years time, for heck's sake. The IMF did say it might be wrong about the UK prices. Property in the UK is expensive because the government has a policy of boosting the population by millions while providing virtually no new homes. Our land prices have always been very high, the SE is very densely populated. It is classic supply and demand - demand is still rising and supply is not. Also lifestyle changes mean more people live alone, taking up more homes and people are spending more on homes and less on pensions, which are unreliable. In the USA prices are coming down because developers have built thousands of extra homes and because lending was much more irresponsible than in the UK. Prices will only collapse here if people are obliged to sell through unemployment or soaring interest rates. Any sign of those happening?

Tom Moncrieff, London, England

Fortunately the OECD does not control property prices in the UK.

There is no prospect whatever of a 60% price reduction, and we have been hearing these Prophets of Doom forecasting imminent catastrophe for the UK housing market for 5 years now.

The market has already slowed - in the case of 4-bedroomed house, in part due to New Labour's idiotic implementation of HIPS - and there will (and should be) a halt to the silly house value inflation we have seen over the past 5 years.

But the most serious threat to the UK housing market is the proposed Planning Gain Supplement (i.e. tax) which has had disastrous consequences on the 3 previous occasions socialist governments tried to introduce such a land tax. (Harold Wilson was the last to try it.)

But Gordon has seen that PGS would be a disaster for his popularity and has deferred its implementation - he says until 2009, but I reckon until after the next General Election.

Don't panic, Mr. Mainwearing !

Trevor Dennington, Bury St Edmunds, Suffolk

Hooray!

The crash is on its way...

(priced-out no longer).

Neil Miller, London, UK

A quotation from an article i read in 2001 'The British housing market looks dangerously over-valued'. I was a fool to read that then and listen and not buy and I'd be a fool to listen now. The key player is London; more people want to live there than there are houses available. And i don't see the fundamentals shifting anytime soon. It may wobble a bit but think long term, 10 years plus, housing will be even more expensive and I bet we will be reading these articles again and again and again and again.... (and I don't have a house so a crash would really suit me, which is why it won't happen!)

James O'B, London, UK

The IMF have been saying this for a while, but with the prospect of a rate cut relatively soon, a crash is highly unlikey. The BOE wont risk a downturn and inflation is still below target. UK houses may be slightly high at the moment, but the dreamers who predict a 60%!!! drop in house prices are talking complete nonsense. A 2 year period of stagnation is much more likely. The IMF states that there is a high level of uncertainty in their findings as they dont allow for many factors that are driving the housing market such as inherited wealth, immigration, lifetime mortgages etc. I think eric campbell is getting slightly confused between negative equity and sub-prime - nice of you to let us know your coments tho. Best leave it to the big boys in future tho....

Jackboy, London,

Good to see an unbiased organisation provide a evaluation of the housing markets, maybe people will start to see sense. It's hardly rocket science here.... House prices are 9-10 times the average yearly wage, house price inflation has been climbing at a minimum of 12-15% per year when wages are increasing at less than 4%. Iam sick to the the teeth of hearing, "blah blah shortage of supply", "blah blah influx of immigrant workers", "blah blah, planning restrictions".... look you idiots, if people cannot afford to buy a house, then they will not buy. If there are no buyers, house prices will fall. Basic economics will prevail in the end, have no fear.

Loop, Derbyshire, UK

This probably isn't what people want to hear, but bring it on! I really want the market to crash. As a first time buyer, I can't even look at owning a house. I will have to rent if I want to move out of my mothers house any time soon, which as a newly married man, I do.

What is the point of wasting £600+ on rent every month when my mortgage repayments wouldn't be much (if any) higher? I have looked at almost 100 houses around the area I live in and they are, without exclusion, appaling. I know I'm not going to get Buckingham palace as a first home, but I'd like something with a roof and at least one doubl bedroom.

P.S. Perhaps if my local area wasn't flooded by second homes and holiday haouses, I might be able to afford something. Who knows?

Andrew, Exmouth, Devon, England

Just as weather forecasts don't change the weather, property price forecasts won't change the price of property (not in the long run anyway). A great feature of markets is that it gives us all the ability to put our money where our mouths are. There are many investment vehicles that allow this. So if you think prices will rise, then buy. If you think they will fall, then sell. Those that do their homework will prosper.

Eric Murray, Auckland,

I'm amazed the UK domestic real estate correction (aka crash) didn't occur some four years ago. This was a factor in my decision to emigrate at the end of 2003. I was panicking imagining I'd left it too late. Now I'd be several hundred thousand to the good. But that would have meant three more years in UK, and put me in the, "I'll emigrate just as soon as..." category. Believe the US Marine Corps have a colourful expression regarding excuses. .... everybody got one.

Andrew Milner, Yokohama, Kanagawa

What, no BTL investors jumping in to say that the IMF has got it all wrong and that property prices in the UK can rise forever at three or four times wage inflation?!

George, East Sussex, UK

It all starts to make sense. Labour haven't called a general election as they would have won it and they'd be the governing party when the housing crash occurs. They must be desperate for an election losing opportunity to come along before the crash happens

AG, London , UK

Many people say there will be no slump in Britain. The Estate Agents, Solicitors, the Building Societies and Banks, recent buyers sitting on paper profits of tens if not hundreds of thousands of pounds, buy-to-letters with empty houses and dwindling rents , all say there will be no slump. Every one of them knows in their hearts that there will be, but all have vested interests in talking the market up so they can make a last desperate effort to wring what remaining few pounds they can out of the gullible before the crash occurs. The OECD said that British housing is overvalued by 60%. Work it out for yourselves - on OECD figures every house in the country is worth 40% of what the Estate Agents say it's worth. Your half million pound house will fetch £200,000 in a couple of years time. How much do you owe on it. Really! Well now you know what sub-prime means and nearly every mortgage given in the last ten years will become sub-prime because house values will not cover the mortgages.

eric campbell, harrogate, uk

The boom has ended, bust is on the way. There are a few reasons why house prices have not already crashed and these are; irresponsible lending practices, insufficient house building (private and council), the buy-to-let craze, people living off credit cards or ever increasing loans and massive immigration fueling demand for property to rent or buy.

Wage inflation has been low over a number of years and house prices are now at least double the truly affordable price bearing in mind that we should all be saving much more for pension purposes.

Kevin Herbert, Greater Manchester, UK