There are more people taking it out far higher multiples than 89.

Selective thinking...now they talk about prices being higher than 3 years ago. What is the relevance?

As for credibility, 2 months ago they used the same fundamentals argument as to why prices couldn't fall. Then reversed

Trevor, South east,

I donot recollect the same economists clamouring for a interest rate hike when the prices were climbing up? Self preservation perhaps??

abhayc, greenford, uk

Are the "Bricks Chicks" still going to try and tell us there's nothing wrong with the property market, or will the penny finally drop now with Anne Ashworth ?

Will Hicks, London, UK

You would have to be certifiably insane to buy a house now - £5,000 off the average price in one month alone, and an accelerating downward trend for the foreseeable future. Who says renting is dead money now?

Scarlett, Norwich, UK

Iain in Tokyo - the old, like me, came from nothing, studied hard, worked in unsavoury places, like the USSR, dragged a young family across Europe and the USA for the job and have now retired comfortably off. Yes, we worked for it, so deserve it IMHO. Get off your bum and do something useful!

Archie, Sarasota, USA,

Deep Impact.

Most important now is cashflow. Meet your outgoings. Eventually the financial tide will return, most important is affording your aspirations. There is no right to have a house or anything else come to that, you can legislate but you cannot force it. No natural demand for housing.

Goldfinger, Gloucester, UK

Tim - the Bank of England is nationalised - it justs acts independently. Anyway lower rates won't help. Banks won't pass them on. They don't want to make the loans because they can't sell them to anyone. They just sit on their balance sheet using up capital. They're raising rates to avoid lending.

Giles, Singapore, Singapore

Someone wake up Gordon Brown. He nationalised the wrong bank. Best measure now is to nationalise the Bank of England and immediately reduce interest rates to 2%. The war against inflation was lost years ago. The priority must now be to save what little there is left of the economy.

Tim Worlock, Cheltenham,

Excellent - prices have a long way to drop yet, and you'd be mad to buy now!

John Ford, Exeter, UK

There is a generation of young buyers out there who have only ever seen prices rise. Those of us who've lived through a crash or two are now experiencing deja vu - and in every boom before every crash, everyone said 'It's different this time' and 'prices will always go up'. It isn't, and they don't.

Dea, Basingstoke, UK

Oh great, I finally got a job where I was able to afford a mortgage and put down my savings from my previous job as a deposit. I wish there was some stability because I can't afford to lose this money. It's not just people making a lot from property that lose out.

allan, Glasgow, Scotland

Let the market find its level. In the meantime, FTBs keep saving, be patient, you'll be rewarded, prices will fall to an affordable level.

karel , london,

In my expensive London NW area, prices are down 3% from July, and only 20% of properties are selling, as an estate agent told me. The fall will start in the Autumn as bonuses will be about 50% down on 2007. The 2007 bonuses have been paid in Feb 08; there will be nothing to hold prices next year.

Francois, London,

These houses better fall fast for there is a long way to go.

Fabio C, London, UK

As house prices fall your equity is eaten into but your mortgage debt always remains undiminished. 25% deposit and 75% mortgage debt becomes 100% debt and 0 equity if prices fall 25%; simple mathematics that Ms Earley pretends not to understand.

john, milton keynes,

Great news. There's bargain to be had out there, me thinks, and even greater bargains to come. Carry on Gordon, fill yer boots!!

Paul Downes, Milton Keynes, Bucks

Yes, the bubble has burst. The fallout is starting. The need at present is for stability. Consumer inflation / falling house prices should; if the Bof E is honest and independent- should mean that interest rates are left where they are. Don't rock the boat BofE.

Robert G, Stockton-on-Tees, United Kingdom

Obviously she has a vested interest but how can any economist call for a cut in interest rates? The fall in house prices is exactly what the bank has been trying to achieve. Now they need to choke off inflation. It is not Armageddon.Things are actually quite good out there.

C Grant, Monreal, Canada

The press needs to start distinguishing between London and the rest of England. House prices in London will not be coming down this much.

Peter, London,

So house prices have fallen from ridiculously overpriced to only slightly less than ridiculously overpriced.

Paul, Coventry,

Price drops and the credit crunch aren't the problem, the problem was the sheer madness of the ten years leading up until last August! Prices were allowed to get out of all control, and all relation to the earning ability of average people (i.e. not city financiers, football players etc).

Simon, Leeds, UK

Interest rates need to rise, not fall, to compensate savers for inflation. Cutting rates will just send inflation higher. No more blowing up the housing market bubble -- it just popped!

Carol, Derbyshire,

2.5% a month equates to an annualised loss of about 35%. That would actually start to mean housing was somewhere closer to its proper value.

Interesting how now the year on year figure is unarguably negative the estate agents bang on about the comaprison with two or three years ago!

TC, London, UK

Mark, Surbiton.
I presume your one of the people in their 50s. I'm 24 and have been saving a deposit for 4 years, the problem is the price of houses have been flying up far faster than I'm able to save.I can't wait for the fall, I might finally have the opportunities you had when you were young.

Paul, Bradford,

Ste Tea, it is lack of it interference on labours part. Labour built an economy built on debt, borrowed money rather than save, when the market was booming. Interest rates put down to stimulate housing market. Why did they not put them up when house prices were soaring beyond reach?...easy credit

christian, lancaster, uk

"In 1988 85 per cent of loans were on an interest-only basis. In 2007-2007 only 30 per cent took out interest-only loans"!

In 1988 the mortgages were 'Endowment', with additional premiums paid for ins. policy to pay off capital.

In 2007, Int only with no plan to pay off capital.

Madness!!!

Phil, Bristol, UK

So what? It was going to happen . either today or tomorrow, deal with it.

roniie, Bucks, UK

"...consumers expect prices to fall by 1.7 per cent over the next six months."

So, prices have gone down 2.5% in just one month, but will only go down a further 1.7% over the next six? I think removing that decimal place might give a more realistic figure!

Andy, Bath,

mark , surbiton, surrey,- how long do you think people will have to save to buy a house 5+ times their earnings?
That's not so easy do then houses increase annually by more than your earn in a year, saving means you are going backwards!!

Malcolm, Leeds, Yorks

friends in my area of lincs have spent 15 to 20% of their house values on improvements but their houses have not risen in price and many are not up on prices 3 years ago,there are 6 houses for sale in my rd on rightmove, only 3 have boards up, there are more homes for sale than
we can see

dave roberts, spalding, lincolnshire

You need to save up to buy a house to put down a proper deposit. My in-laws paid cash for their 3 bed semi in 1932 and lived there until they died last year. Houses are life time investments to build a happy home and have a family not speculative opportunities to grab unearned cash.

Colin Horsman, Cambridge, UK

Tony in Brighton. well done youngsters today think they have a god given right to buy a house while living the life o 'reilly. let them save up like everyone in their 50's had to. They are poor and always will be because you need more than ambition to make money, try working for it, celebs

mark , surbiton, surrey

Best news in a decade. Finally ordinary people can afford a home ( after another 25% fall).

Kara Swart, London, UK

Yes, let them keep falling, eventually some of us will be able to get onto the property ladder.

Farrukh, Woking,

"consumers expect prices to fall by 1.7 per cent over the next six months"

Presumably these will be consumers who have mortgages already and who are kidding themselves. Those of us who did not lie for loans at 5 or 6 times income expect prices to fall an awful lot farther: 30-40% anyone?

Angus, Edinburgh, Scotland

Oh Gordon you sold the gold at the price of bricks and makes us buying bricks at the price of gold!!

Somna, Croydon,

It all has to do with the increase in global oil prices. It has nothing to do with Labour's interference with the market, increase taxation through stamp duty and HIPS.

steve tea, manchester, cheshire

A day that will go down in British Social and Economic history - The largest monthly fall in UK house prices since records began - and not a moment too soon. This figure will undoubtedly increase as the correction in prices gathers pace.

Allan, Inverness,

Why should the interest rates go down?
People who cannot afford to buy should never have bought.
Interest rates should be increased to curb inlation and not simply to help home owners.

Nilesh Shah, London, England

"consumers expect prices to fall by 1.7 per cent over the next six months"

In relation to cost of homes to take home income I expect them to fall a damn site further than that.

Dave, Gibraltar,

To Iain in Tokyo.The old with high price houses worked hard and saved money during their time most of them with lower wages than a lot of todays youngsters who spend their money only on hedonistic pleasures. Anyway the old ones are not going to sell their houses at all, not at least a £1 to you

Tony, Brighton, uk

How long will Ms Earley keep her job? It makes me laugh when the boss of HSBC says rates must go up to fight inflation agreeing with leading economists such as Marc Faber and Jim Rogers, where as Ms Earley wants a cut. Who has a vested interest in the property market... I wonder...

Paul Jones, London,

It's mystifying as to why Ms Earley should want an interest rate cut. So as to prop up house prices and stoke inflation some more? The housing market is not some kind of glorified casino, and a correction is a normal thing after the way in which prices became so over-cooked. Painful but necessary.

peter koeb, bournemouth, england

Luvverly!

Dennis Makesy, Leeds,

What great news. A redistribution from the rich to the poor, and from the old to the young. If house prices drop to 1 pound for a house, then under 40s can stop being wage slaves. The old, rich will have to cut back on that vital holiday to Davos this year though.

Iain, Tokyo, Japan

This is only the start of a very sharp fall in UK house prices.The only people who will put their house up for sale are people who have to sell.The only people who would want to buy are those who can get a mortgage or have cash and want to buy a house at a knockdown price.The market is non existant.

stephen hulton, eure, france

They are deflating faster than Sarah Beeny's bean bags.

barry wiseman, bromley, kent

Can't wait for the bubble to burst. It will be better for all in the long run..

Hamad Lone, London, England