It can be a good sign that you are approaching some sort of turning point when forecasts start to look bonkers. Last summer, when the price of oil hit a record $147 a barrel, the air was thick with predictions that it would rise to $200 or $250. Instead it fell to $40.

Now we have an apparent prediction, from the City firm Numis Securities, that, having fallen by 20% already, house prices could drop by another 55%. Hyperbole grabs headlines, and the Numis report certainly did that.

To be fair to the firm, it does not appear to have been looking for the publicity. The report was published a month ago and not circulated to the press. Its range of numbers on house prices is so large as to include virtually all possibilities, except a quick recovery. House prices are overvalued by 17%-39%, it says, implying the need for a 15%-28% drop – but, given the usual “overcorrection”, they could fall by 40%-55%. Oh, and Britain might go bankrupt.

One of the lessons of recent months is that even the apparently impossible can happen. Having read the Numis analysis, though, I have to say I find it unconvincing. Prices will certainly fall more, but are we going to see an average house price in the UK, on the Nationwide measure, of £66,000 compared with just under £150,000 now? No.

Even at current prices, interest in the market is increasing. The Royal Institution of Chartered Surveyors (Rics) says numbers of new buyer inquiries rose in February for the fourth month in a row – at their fastest pace since August 2006 – even though the difficulty of obtaining credit is reducing the extent to which this is translated into activity.

At the same time, surveyors are reporting an upsurge in valuations as potential sellers look to put their homes on the market. Many decide not to proceed, though; as a result, many estate agents have a shortage of properties to sell, while those they do have are “stale” after too long on the market.

Stocks of unsold properties show a 12-month decline of 26%. Even in these depressed conditions, Rics reports a rise in the ratio of sales to unsold stocks of properties. So, the stalemate persists. Buyers are keener, but face significant financial constraints. Sellers do not want to sell in a weak market. Spring is here, but it doesn’t yet feel like it.

Go figure

- Asking prices for homes in 16 towns and cities in Britain have fallen by more than 20% over the past six months, according to figures from the property website Globrix. Windsor, in Berk-shire’s stockbroker belt, has been among the worst hit, with prices down by 21.1% since September. The worst performer was Blackpool, where prices dropped by 28.2%, closely followed by Kilmarnock and Hertford, which both saw falls of 26.5%. Globrix reported an average decline across the UK of 11%.

- Where should you live to enjoy the best rural quality of life in Great Britain, and how much would it cost? The Halifax believes that the perfect bucolic spot is mid-Suffolk, where the locals have one of the country’s highest rates of life expectancy and live in larger-than-average homes. Even better news: house prices are on average £9,810 below those in eastern England as a whole.

home.economics@sunday-times.co.uk

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