One thing that has not been mentioned by any postings on here so far is the massive disparity between the cost of housing in London and the South East and the rest of the country.

I believe the Government and the Train Operators have an equal responsibility for the high cost of housing on the commuter routes out of London. If the operators had not been allowed to charge extortionate amounts for commuters to get into the city, then commuters would not be forced to take overpriced housing in the commuter belt. This demand has fuelled the ridiculous 20%+ pa house inflation in the South East in particular over the last few years.

How 1st time buyers can afford a 'starter shed' in the SE for £250k+ is beyond me.

Salaries in the SE are not double those paid in the Midlands, NE, NW etc.

These 20%+ annual increases are now starting to affect SE residents though, if the packed trains from Birmingham, Coventry and Rugby to London are anything to go by.

PC, Rugby, UK

I wonder what effect the lack of big city bonuses will have on the prices of property in London and the South East?

Near zero house inflation by the end of next year? Prices are already falling in London and the ripple will be felt pretty quickly. In my book that's less than zero inflation isn't it?

The government is in such a mess at the moment, the last thing they will want is a property crash. The problem is even if they pressure the BOE to reduce interest rates, the credit squeeze will stop the ridiculous 4+ times salary loans of old, so prices will still fall.

A case of too little too late?

Phil, London, UK

Anyone who thinks that falling house prices in the current climate will benefit first time buyers do not understand the market. As soon as credit becomes available prices will rise and the current credit restrictions and higher rates will make obtaining a mortgage difficult for first time buyers.
It seems that the banking sector having created this crisis, should get their act together and agreed away forward, before they also create a recession. If they don't trust each other then how do they expect their customers to trust them.

Terry, Durham,

David, Sevenoaks, Kent. Surely the solicitor's role is limited to warning the buyer/borrower that if they don't keep up their mortgage payments the property might be repossed (although worrying that people borrowing hundreds of thousands might be so dim that they don't know this). The fact that it is idiotic to borrow 6 or 7x income is nothing to do with the solicitor - the mortgage lender and borrowers themselves must take responsibility for this.

Clint, Staffs, UK

I welcome this turn of events. house prices must fall for justice to be served and sanity restored in the country

sara, Ealing,

A decent rate cut of perhaps one percent from England and the rest of europe ,throw in Canada as well ,would do much to help toward a softer landing within this credit crisis . my hope & sugestion would be that this occur in unison so as not to create dislocatiopns in world markets There are only two choices,to be ahead of,or behind this impending doom

george, satellite beach Florida, U.S.A.

About bloody time. Fools and their money are easily parted, and EVERYBODY wants it, but the banks get it, every time (with one exception)!

Dodger Munzie, Perth (the original one), Caledonia

Some estate agents explained to me earlier in the year that they had jacked up prices because "prices will increase by 10% next year". Now that these expectations have evaporated, doesn't it make sense that they should reduce asking prices by at least 10% across the board to reflect the new reality?

Davie P, London,

Ho Ho Ho! How exciting! All those repossessions going cheap at auction! Can't wait!

sophie, norfolk,

This looks like the start of an accelerating decline in prices. Never mind zero, next year prices will fall into negative territory when those BTL investors start to sell out to take advantage of the aterations in capital gains tax. There is now a tightening mortgage market and higher mortgage rates across the board. Even a reduction in MLR is unlikely to effect real rates now. Of course in the long term Gordo will also probably try his incompetent best to make more land available and push local authorities into granting easier planning permission. Local Authorities are already issuing questionaires asking for members of the public to identify land for building because they are being bribed by central government grants to do so. This will run and run and prices will collapse, after all it doesnt cost so much to actualy build a house and when you look at the present stratospheric asking prices you can see there is a huge bubble. Remember - you heard it here first

Diddly Do, Liverpool,

Add to that the biggest Tax Burden on the individual in decades and petrol at 110pence a litre and things are very tight out here in the real world.

Salty, Reading,

HIPs
I note with interest that Yvette Cooper, the Housing Minister, is informed by independant consultants that the marked slow down in new instuctions of propertys to estate agent is temporary. The introduction of HIP's, together with Northern Rock, (both the government's responsibility), could prove catastofic for the UK economy.
I do hope Mrs Coopres independent consultants have work from outside the UK.

James Harwood, Swansea, UK

Poor financial advisers with Peter Balchin putting their heads on the block. Just in case his "holier than thou" attitude fools, remember that lenders require the SOLICITOR to ensure the clietn understands the risks associated with mortgage. In my experience, most carry out this obligation inthe most cursory of fashions.

David, Sevenoaks, Kent

In response to Pete Balchin: buy to letters CANNOT sue their IFA's as buy to let mortgages are not regulated.

ewan, sherborne, dorset

batton down the hatches now all hands to the decks as labours wave of doom approaches

jason, salford,

I thought it was common knowledge that the slump started a few months ago. It amazes me that people with a gram of intelligence are still quoting supply/demand as an issue in the UK Property market. This is absolutely laughable. Here in Brighton we have literally hundreds of empty properties and in Devon, Cornwall, Cotswalds etc lie thousands more. If there was a supply issue why are estate agents talking of a pile of properties in London and South East that they are unable to shift.
There will surely be those that believe the market will be "stable" but let me put my head on the block and say that by this time next year prices will have fallen a minimum of 15% and looking like dropping much further in 2009/2010.

The Japanese housing market has still to recover from its crash in 1990/1991. Try telling the Japanese that you will "never lose with property" or that any crash will be temporary.

Adrian Brown, Brighton, East Sussex

Bring it on. Crash, crash away! Do I give a damn about those facing negative equity? Of course not! You took a risk and decided that the risk was worth it. If prices go up - you benefit. If they go down - you don't. I decided not to take that risk, withdrawing my ability to benefit like you if prices go up, but unaffected if they go down. Why is this government constantly skewing the economy by trying to prop up the bad decisions by one portion of the population, at the expense of the rest of us?

Crash away - I can't wait!

JK, London, UK

Doesn't anyone who comments on the present property situation realise we are already in a slump and it's going to get much worse. Government toppling worse.

Nick Dixon, Sutton Coldfield, England

property market = cyclical
We are at the peak of this cycle.

D P, Guernsey, UK

As the IMF has stated that the average house price is some 40-50% overvalued in the uk.The writing is on the wall for all to see.And anyone who is looking to sell a house at an ever increasing value is living in a pipe dream.MARKET FORCES WILL PREVAIL as someone once said.

les, st helens, england

The way things are going in 10 years half of all starter homes in the UK will be BTL, how could a government with a policy of occupier ownership be allowing this to happen? Could it be that they are prettified that any anti-investor legislation could trigger a slump? Or perhaps they wish to avoid a lack of BTL accommodation to house migrant workers and those on benefits? Or has it got something to do with the fact the some members of the government and their friends have significant BTL interests?

L Mckay, North Sheilds,

PT, it will make no difference if you look at for example the LIBOR rates... unless we are all destined to borrow off a Bank of England of course...

This is actually great news for this reason:

1. Buyers who paid a 10% deposit and borrowed 3.25 times their income will not be affected. The rest knew the risk and well one can have little sympathy.

2. Buyers who paid no deposit and borrowed up to 6 times income with say Northern Rock. They may escape they may not depending on whether they were properly advised by their Financial Advisers and whether their income was rising when they borrowed (i.e. newly qualified professionals).

3. Buy to Letters. Those in it for the long term will probably be fine. They can probably weather the storm and increased rates / lower or reduction in capital value. The rest, probably amateur speculators can again sue their Financial Advisers.

4. First Time buyers. The engine of the housing economy. They will be back to 3.25 times single income.

Pete Balchin, Solicitor , Bristol, UK

This is a demand issue not a supply one. Thus, I don't buy the importance of HIPS - firstly, it covers only a portion of the market and secondly, it would surely be a pass-through cost? True you may get fewer speculative sellers, but my view is that this is likely to be limited.

Robert, Paris, France

Of course there are going to be less buyers now. If you buy a property now you must be mad, unless you are down sizing. Here in Spain the market is in free fall yet there are some English people that are just arriving and opting to buy. The problem is that their house prices fall off a cliff as soon as they've bought. Here there are 400,000 vacant homes and they are still building like lunatics. Within a few years there will more than likely be a million vacant homes. that means a HUGE price correction. If you come to Spain keep your money in your pockets for a couple of years and save yourselves €100,000 on the price of your dream home.

david, madrid,

Couldnt agree more, how about removing the mortgage interest relief that buy to let investors qualify for? You dont get in on your own main residence so why on a Buy to Let? Oh yeah Tony Blair had 5 BTL's. Silly me

david connor, bognor regis,

I'm not sure how we can see anything other than a sharp correction. If the banks are no longer able to lend so much money to house buyers then surely the market has to correct?

J. Scott, Cambridge, UK

If there's any sign of a real price downturn, I honestly believe the BOE will bow to political pressure and slash interest rates. The economy is highly dependent on high and ever inflated house prices, and the Government cannot afford for this to stop.

PT, Tynemouth, UK

It's about time. Hopefully most of the fall in lending is to that portion of the market open to speculators fueled by greed ever widerning the gap between todays have's and have not's. This government keeps telling us how succesful the British economy is. I would have thought that success should be measured on the well being of its population. We'er becoming a joke unable to house adiquitly a whole future generation. Houseing is to fundimental to a nations well being, not wide sceen TV's and consummer crap from far off lands which will soon become tommorrows land fill. Government needs to stop pandering to the vested interests of the banks and nimby councilors and make sure that future generations of hard working law abiding familiys are able to live in affordable (not cheap) houseing.

PG, london,

The rediculous prices might have soemthign to do with the slow down too!!

Chris Eades, Chipping Norton, Oxon

"A very real risk that the housing market could see a sharp correction" risk??? ! GOOD!!!! About time,maybe some of us will be able to buy a house.

john nigel capper, Birkenhead, UK

"correction" being the operative word....

Steve, High Wycombe, Bucks

There needs to be a sharp correction. The price of homes has far outstripped the ability of first time buyers to afford the inflated prices of the housing stock in the UK. Something needs to happen to stop people making such large sums out of what should be a basic commodity.

Cwillnic, Cardiff,