To Lucy Close in Cambridge.

Why are you complaining? You could buy in Norfolk/Norwich - it's an easy train commute to Cambridge - but perhaps that is too downmarket for you.

And by the way, a generation ago, credit cards were non-existant, exotic overseas vacations were for the truly rich, few owned one car and eating out was a special occasion. Mobile phones (and their expensive monthly bills) not invented and neither were computers (and their expensive monthly broadband costs).

In the current "me generation", and on a combined salary of 46 thousand pounds, it seems all of the above apply to you!

Lyn, santa barbara, california, usa

Talk of a 40% crash in prices is nonsense - as prices fall buying activity will increase, mortgage approvals will increase and interest rates will be cut in the new year. Sure, there will be a dip in activity in the short term and thats no bad thing to take some of the steam out of the market. Hopefully the government will pull its finger out and get some more houses built (yeah right!) but we have reached the top of the market and coming down the other side now. Lets get the house price / salary ratio back down a bit!

phil, london, uk

Lets stick with the basics. The populations constantly growing, theres a shortage of available housing, house building is too slow to cover the shortfall, any adult with ambition wants to own their own home, all of this means there will always be house demand. The current slow is a result of interest rates and media histeria, both of which are controlled. Dont allow yourself to be controlled, focus on and do what you want to do otherewise youll never progress and those who are well off stay that way. Think about it.

Mr IS, Enfield, England

P in Norfolk - are you an estate agent? To suggest now is the best time to buy is nonsense.

Reasons being:-

1) Lack of capital growth on property will mean most BTL investors will liquidate their assets. Rental yields don't cover mortgage costs anymore meaning there is no incentive to keep a BTL.
2) Economic fundamentals in the States have been reasonable, and that hasn't stopped their housing market going into meltdown.
3) We are currently seeing the effects of American Sub Prime (overlending at cheap rates) here, people forget that we have our own Sub Prime Crisis brewing and that, coupled with the fallout from America and the on-going credit crunch, will cause chaos here.
4) LIBOR at a 3 month high

People to tend to have a rear-view mirror approach to housing market predictions, which is not to be unexpected - its difficult to quantify the effects of the unknown going forward.
What we can predict are choppy waters ahead.

Matt, Birmingham,

i do not think that prices are ever going to fall in uk( some seasonal variation is always there) for three main reasons; ONE increasing immigration ( the wealthier one as well), SECOND,the global increase in property markets- look at the middle east and places like Indai, Srilanka and Nepal where properties are sold at the prices you could have never imagined even 5 years ago and thirdly the Hips scheme- people will not bring in the houses in the markets untill ready to sell- so there will be a huge demand when there is no real supply. last but not the least, the people are much richer now than use to be so a couple of hundred pounds here and there on the mortgage is not going to make any big difference. the bad news is for the first time buyers and if you are NOT from overeases!- otherwise if you are a home owner- dont worry- its never going to be a big crash anytime soon.
ta

peace, Bristol, UK

Peter Vuorela is right as any sensible person knows.
Interest rates are not high, In fact if inflation was honestly stated,rates should be a lot higher. Doctored inflation numbers are very much responsible for the artificially low rates that have been set in the past,and now, by the B of E.
Of course,the main problem has been,and still is,indecently high lending in the interest of commission and pofits.

nic, royan, france

The problem is not 'relatively high interest rates' (which they are not) but VERY high debt levels. The worst think that BoE could do is to lower interest rates, in fact they should raise them to 6%, if not to 6.25%. Yes, many people would end up getting repossessed but the problem can only get worse if the rates are lowered now and the bubble continues to get bigger and bigger until...

...the biggest house price cra$h in the living memory. Entire generation could end up in old age poverty as the mortgage will eventually have to be paid off and most people are now paying interest only as it's the only arrangement they can - just about - afford and inflation is likely to be rather moderate, hence this madness needs to be stopped now.

Peter Vuorela, London,

To all those still trying to peddle the nonsense about a property shortage, please a bit of common sense. You must have seen film of the old soviet union, world war II etc with people lining up for food. That's the nature of shortage - people going without. The streets of Britain are not lined with the homeless, there is no shortage of property. What we have had is a proportion of investors hoarding property, thus pushing up prices. Now that prices are on the slide some will try to sell, pushing prices down further and the whole thing will spiral downwards. As others have said, this is capitalism, millions of individual, self interested decisions. As for those BTL investors who have previously said that they'll hang on to their properties come what may - just wait and see. No one wants to be left in negative equity and facing financial ruin. They'll try to sell because this makes personal economic sense.

George, Brighton, UK

This could prove to be a self fulfiling prophesy. As first time buyers watch in fascination as house prices start falling (an unknown thing - surely house prices have always gone up ) they sit on their deposits. They see BTL sellers appear on the market in bulk, to take advantage of the reductions in interest rates after April next year. Further falls follow and new BTL investors finaly give up the ghost as they find their overheads soaring and their rental income stagnate. The final straw will come when a huge tranch of building land is released, folowing Mr. Brown's bribe to local authorities to identify more building land. Oh and by the way, when the bank's minimum lending rate comes down it won't be reflected in mortgage rates, because lenders will be busy repairing their balance sheets after the soaring costs of interbank rates (LIBOR).
Like any other market, this one is going to overshoot on the way downwards and first time buyers with good nerves will benefit hugely.

Diddly Do, Liverpool,

Come and live in cheerful Northampton. The house prices were always reasonable.Commuting to most cities is well within an hour.

Brian Kelsey, Northampton, UK

G Hallam, Eggborough, North Yorks. Your property sounds like a positive bargain at 240k, but ask yourself a couple of questions. What was the equivalent property valued at 10 years ago? How much has it risen in value and how much have wages in the area gone up during the same period? If you find the two seriously out of sinc', then your property IS overvalued and will fall along with everywhere else. Sadly this is another effect of the madness. We hear about shoe boxes in London going for 500k+ and suddenly 240k sounds cheap. It ISN'T, it is still more or less 10x average wages! Properties like yours were selling for 100k or so 10 to 12 years ago, if they had risen in line with wage inflation they'd be about 150k today. The 40% drop predicted by the IMF will bring them back into line.

Clint, Staffs, UK

So Mr Miller property is overvalued?

Not up North!

We live in a Village in North Yorks with excellent road and rail links to Leeds, York and Hull (all approx 20 miles away), our house is a 4year old 5 bed 4 bath detached house.

Value £240000

Overvalued? I think not!

We constantly have to endure the hysteria of the south when it comes to property prices. Where if prices fall in London then this has to be the case everywhere else. What Tosh!

It is true to say that in areas of Leeds, Harrogate and York property values have risen sharply but this is mainly due to greedy investors from the south trying to make a quick Buck!

Its just not true to say that property is over valued across the board, but that it only seems to be in pockets which have been created by the very people who now protest!

G Hallam, Eggborough, North Yorks

This is just the start. At the moment it's stalemate, sellers don't want to drop their prices and buyers don't want to buy. Over the next few months the market will be flooded by those forced to sell because they have come out of very cheap fixed rates and from April 2008 BTL investors taking advantage of the new CGT rules. This won't be accompanied by any notable increase in buyer numbers, so prices will fall big time. We could easily see the 40% fall predicted by the IMF over the next couple of years.

Clive, Chichester, UK

The BOE cut rates in August 2005,which was a big mistake.Will they repeat it?

Stephen Hulton, Eure, France

It;s not surprising is it, buyers know property is so over valued now, In the long term there are many sound reasons to see and want prices down. Bring it on.

T Miller, Oxted, Surrey

It appears the rate of house price change might be greater than it was 2 years ago. WOW!

Stephen, London,

"pain"? After a long run of double-digit increases a drop of 20% or even 30% can hardly be called "pain". Somewhat "less exuberant" is what I'd label it.

Ed Zuiderwijk, Cambridge, UK

A housing slowdown is likely to be caused by the mortgage market, just like in the US! Some issues:

Between Q4 2005 - Q2 2006, over 70% of mortgages taken out were fixed rate, the majority 2 years which will go onto SVR or need to be re-financed. The average 2 year fix was 4.6% at 31 Oct 2005, so with average SVR currently 7.68%, monthly interest will go up 67%, or refinancing with average 2 year fix at 6.13% at 31 Oct 2007, a 33% increase.

A significant number of mortgage products have been pulled and credit criteria have been tightened, which could further push up the cost for riskier borrowers.

Libor (the rate banks borrow at from other banks) has gone up relative to Base rate, meaning that if this persists, banks will need to increase how much they charge over Base rate.

Repossessions are rising at 40-50% per year, and if house price growth is even flat, then banks will need to adjust their pricing for the fact that they will start to lose money on repossessions.

Nic, London,

Dream on, vested interests and BTL owners. This property crash is absolutely the tops!

The Spring ABN-Amro report on house prices predicted a 40% UK over-valuation because our exceptionally low price elasticity of supply caused 'investor' demand to accelerate prices.

That investor demand is plummeting: so will prices. Forget the funny ONS predictions; that's a smokescreen by a government desperate to stop the BTL crowd from panic selling. It won't work.

Alexander Davidson, Crawley, UK

"(b) there's a limited supply of housing, and the highest bidders in the new era of gender equality are two-income families:
(c) the consequence is that you now need two salaries to buy a house, whereas a generation ago you could buy it on the husband's salary. "
My partner and I have a combined salary of £46,000 a year and can't buy a flat/ 1 bed house in Cambridgeshire. So who is the highest bidder? It certainly isn't your average combined salary couple.

Lucy Close, Cambridge, UK

"Relatively high interest rates"? Anyone who is older than 10 knows that interest rates are still historically low. The effects of low interest rates can be seen from the government's own figures i.e the RPI (the measure of inflation used in the 1990s) is presently at 4.1% a figure higher than it was for much of the 1990s. The problem is not the interest rate, but that peoples' salaries are not high enough to buy houses on a reasonable multiple.

Rick, Manchester,

Last time was different. The last price crash had a backdrop of high unemployment, high inflation and interest rates of up to 15%. We now have relatively low unemployment, low inflation and interest rates that look to have peaked at below 6%. I think this time the house price ression will last as long as it takes to get a couple of quater point reductions from the Bank of England which will probably be achieved by Easter to avoid the appearance of any panic. The commercial banks will not take long to start lending again, after all what else can they do with their money? Easter comes early next year and with it a good chance of a mini house price boom. The best time to buy is right now!

P, Norfolk,

It will normalise no doubt - but I can't see a 40% decrease in house prices, especially with the predicted interest rate cuts for 2008.

M Chamber, London,

Seven years renting? Seven years of having someone else worry about the domestic repairs? Seven years of NOT paying interest on a ridiculously huge mortgage in order to end up in negative equity at the end?

Seven years of freedom to leave as and when I like, following better job prospects? Seven years of flexibility, mobility and massively reduced stress?

Seven years of actually saving money, rather than putting a foot on the treacherous, venomous Property Adder?

Sign me up!

Dingleberry, Manchester,

Yeah, we've heard that one before: in 1999, just before the dot-com crash people were talking about a world where ever-higher productivity would always push share prices up in a never-ending economic expansion. Now they're talking about how house prices can't fall because of an ever-increasing population. It's all blah-blah - if there is one iron law in capitalism it's that ALL markets are ALWAYS cyclical, and that includes property. Crash and burn, baby!

Kevork , London, UK

Much is made of the fact that since the Second World War only in the early 90s did the monetary value of property fall. No mention is made of 1974-76 when prices stood still but inflation was over 20% per annum, with house prices falling by over 40% in real terms, or of 1980-82, when another standstill took place against inflation of 10-20% per annum. Many of the so-called fundamentals were the same then - family breakdown, not enough houses being built etc etc.
Oh yes...1974 was also the time of the fringe banking crash and oil prices were setting records. I would put no faith in "soft landings" myself or the UK being "different" from anywhere else.

Dave, slough,

For those wishing a housing crisis with fallas of 40%, I sincerely hope you are financially secure for a long while. The only way houses will fall this drastically is if there is a severe correction in the market which will be reflective of the economic situation, a downturn in the housing market (not the multi million pound pads, the normal 2 bedroom kind) will affect everyones financial position which will be seen through less job security etc etc... We should not be wishing for a crash, we should be expecting the market to follow the economics of the country, right now things dont look so rosy.

bally, frankfurt, germany

I think the drop will be about 25%. This is the same 40%, but adjusted for inflation.

Vladimir Jigouline, Birmingham, West Midlands

Something has a value because somebody is willing to pay that price for it. How is that then overvalued?

That is the market surely. Added to that the shortage of property in this country, amplified in London, the influx of people from abroad looking to live or buy here & i do not see how things could go down too drastically.

Not only that but as soon as prices begin to dip, people will be ready to snap up 'bargains' buoying the market up again.

Neelesh, London,

Anecdotal evidence is always the best - data from vested interest organisations that like to paint a rosy picture shouldn't be relied on. Some are based on ASKING prices, others are seasonally-adjusted and include freakish figures from Northern Ireland and Kensington, which distort the truth - which is that we are on a downward trend which is set to continue for years. Gordon's promise of 'no boom & bust' delivered a massive boom and now, thanks to the 'official' rate of inflation (CPI) having been kept so low to generate spending through low interest rates, we're going to feel the crash far worse than the USA. Sub-prime over there will seem like a picnic compared to ours next year and thereafter thanks to our horrendous levels of leverage/debt. 40% nominal drops over 3 years is not unrealistic.

CP, London, UK

Nice to see the industry is finally admitting that prices are falling in London. After all prices were jacked up in the summer in the expectation of "10% rises next year". But how much will they fall? In April Savills in Windsor had a window full of 5%-6% price reductions..........before the credit crunch!

Davie P, London,

Last time house prices fell 35% to their lows. But it took SEVEN years. Rent if you like....for seven years. Enjoy!

Max Loh, London, UK

I agree with S Wright of Manchester that property prices are overvalued. They have been climbing and climbing and have gone over the top. But I would disagree that they will drop by 40%. The reason is not just that prices go up and down. The economic driving force behind the colossal price-escalation in recent years has been the feminist revolution. It works like this:
(a) the basic law of Economics states that if there's a limited supply of anything, it goes to the highest bidder;
(b) there's a limited supply of housing, and the highest bidders in the new era of gender equality are two-income families:
(c) the consequence is that you now need two salaries to buy a house, whereas a generation ago you could buy it on the husband's salary.

There's no way that the socio-economic developments which have led to this situation are suddenly going to disappear, so there is no way that S Wright's prophecy of a 40% fall in house prices is going to happen.

Edmund Burke, Kingston upon Thames, England

Property prices are overvalued.
They will drop by 40%, keep watching.

s wright, manchester,

A 100% increase only requires a 50% decrease to get the price back to where it started.

David Green, Newark,

Hometrack said house prices fell by 0.1% in October whilst in October, Rightmove said prices rose by 2.7%, Nationwide said prices rose 1.1% in October and the Halifax said prices fell by 0.5% in October. Go figure!

Peter Watson, Swindon, UK