At last, a tipping point is looming for Britain's national obsession: the housing market. The long boom in residential property prices has clearly been over for months, with volatile moves up and down in prices pointing to the market's shaky foundations.

But with hindsight, it may well be that the past month or so will come to be seen as the decisive turning point when the long housing boom mutated into a nasty bust.

There is scant doubt from the latest gauges of conditions that the housing market is now firmly in the grip of a substantial downturn. After detecting five consecutive months of falling prices, Nationwide Building Society has finally conceded that prices will fall throughout the year. Many other expert observers agree and such falls now seem a racing certainty.

What has changed in the past few weeks is the certainty surrounding some crucial assumptions about the consequences of a correction in home values. Many observers have believed that such a correction would mean falls in average house prices of 10 per cent or more, but have argued that a severe property crash was unlikely unless the economy slumped. In the past, Britain has always needed such a “trigger” to send house prices plunging, while cuts in interest rates have often rekindled buying and selling activity, and property price inflation.

This key assumption about what homeowners now face may well still hold, but is facing a critical test thanks to the highly unusual conditions being created by the credit crunch.

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