Quote, "A bubble in the market for new urban flats, in cities from Leeds to Leicester...". This is perhaps a different scenario from a general housing-market problem. These beastly and characterless new apartments had few merits apart from an easy-purchase option. Yet surely we all still dream of a cosy country cottage or rural retrea, surrounded by greenery and far fromthe madding crowd. If there is an over-supply of these countryhomes, which I doubt, we should worry.

Stella Cheriton-Fitzpaine, Lynton, Devon, UK

Sterling's holding up pretty well, though. The longer it appears bullish, the harder it will fall. This can/may happen if the European Central Bank lowers interest rates. Where the euro goes, the pound is not far behind!

John, London, UK

This had to happen eventually. Remember the property shows on TV telling us: 'you can do it, too, if I can'? Everyone and his dog was telling me they were going to have an extra property to fund their pension without realising only a few have the skills and experience to do it.

Anyone can make money when a market's in bullish mode. When it becomes volatile or starts to turn south, that's when the men will be separated from the boys.

(No sexism intended!)

John, London,

@ Paul S, London, UK

I totally agree. Also, Buy-to-Lets get tax relief on mortgage interest - which enables them to compete unfairly with First Time Buyers.

What is the moral justification for Buy-to-Lets getting tax relief?

Martin, Brighouse,

Yet another article on the "imminent crash" in the housing market, the media were quick to talk up the housing boom, now they are getting 2 for the price of one by constantly publishing panic articles written to talk it down.

Of course there is going to be a slowdown, if prices kept on going up at 10 - 13% a year most properties in Britain would be worth over a million pounds after another 10 years. Its just not possible to sustain price increases forever.

Alan, Sheffield,

To: Stuart Law, You are living in LALA Land - the value of a property is quite clearly signified by it's income generating potential. Rents are less than half of the mortgage costs (signifying the real value of the property).

Oh and rentals have not gone up much in the last few years because there is an oversupply - yes, an oversupply, this signifies that the much punted 'there is not enough housing' is simply not true.

Chantel, Wales,

THE PROPERTY MARKET WILL CRASH by at least 20%, as our markets follow the american markets and they have fallen again.the government the banks the estate agents all have helped property prices in this country to be inflated.also by encouraging people to buy a second home and rent it out keeps these prices exaggerated.
the government has not helped by encouraging europeans... to come to this country to walk on the streets of gold.
the govt,banks,credit companies have not helped by encouraging people to falsely access credit which they are not in a position to pay back.

adam, london, england

House prices are starting to return to more realistic levels. House prices in the UK have risen to unsustainable levels and we are now beginning the process where house prices head back to normal trend values. There is a long way to go yet and this process normally involves some under-shoot at the bottom of the cycle.

Keith, Ashford,

There is one driving force behind stable property prices: The greed (or pragmatism) of the seller who holds out for a perceived value.

For those lucky enough to have strong equity in their property, the main concern will still be profit and if they can hold out till the market returns, then most will.

I too remember the 1980s where I had a house that suffered 20% depreciation as well as the blight of a planned Eurostar line extension (which went away)

What did I do? Nothing for 10 years until the market returned. In the end I made a £100K profit before selling.

(Another lesson is that my buyer made a £200k profit in the next 2 years)

Pete, Chichester,

Whatever, I just want to stop renting now, please.

Howard, Manchester,

Some very interesting comments here. Unfortunately many appear to be from renters trying to talk the market down. For those of you saying supply and demand doesn't matter, it does. For those of you wondering why rents haven't risen over the last three years and using this as a justification for there not being a shortage of housing, you're wrong. Rents that you are talking about a primarily on city centre flats - these have been supplied by developers slightly faster, and I mean slightly, than city centre living demand.

Developers have ceased new starts in many cities entirely and in the country as a whole new starts were down 40% in January year-on-year. The housing shortage was bad before but going forwards is going to be dire and in city centres there will be no new supply in terms of housing starts for two years or so. Demand is only just behind supply and soon will overtake. Rents are going to go up to 20% to 30% over the next two years in city centres and 20% nationwide.

Stuart Law, Manchester/ London, UK

I suppose, if you write about it every month, eventually it might be true...

Andrew, Newcastle,

Yes the time has come for a correction 10/20/30 % who knows ..but it will for sure . For now prices will stay high for a little time because all the sellers are still riding the wave of increase that we have had for the last years and they have this belief that someone will make the stupid mistake and buy at the top of the market............ If your a buyer DONT BUY NOW ! You will regret it , leave it for most of this year .
Remember this " If you have anything to sell and there are no takers you have to drop the price and keep dropping it until its sold " and this now is going to happen throughout the housing market............ and its about time !

ally, southampton, hampshire

A down turn in the housing market is no surprise! As well as the credit crunch, the symptoms, as before, were there for all to see! High loan to value ratios, an expectation that home values can only go up, a plethora of mortgage offerings, mass building etc. The lenders are again the main architects of this and should be the ones to take most of responsibility - but will they heck!

Borrowers of course also must accept responsibility for any financial loss they incurr, however, their lenders have done nothing to restrict unwise lending and didn't moderate their lending practice despite presiding over previous housing market bubbles. Borrowers should always consider suing their lenders for negligence and some of their losses and not just walk away with uncleared debts or no home.

HBOSstinks, Reading, Berkshire

With regards to price falls, in my neck of the woods (I have been looking for over a year) on some properties I have seen falls of over 10-15%. These are properties that would have achieved the initial inflated asking prices only 6 months ago but now seem horribly overpriced when you look at what you are getting for your money. It is all about affordability - and sellers need to wake up to the fact that in the current market, buyers will not pay ridiculous amounts for overpriced properties. I bought my current property back in 2005 - since then, according to estate agents, it has jumped up by £150K - that is stupid money and would be impossible to keep up with. I think finally buyers have woken up to the fact that it is not getting the mortgage - that was easy until recently, but the paying back of all that capital plus interest - it is time we stopped putting this millstone around our necks. The whole nation has been duped into driving Gordon Brown's economy based on air and bubble.

Mel, London, UK

Being just the wrong side of 40, I am old enough to remember the last time the property bubble burst, although I was a student then and it was of no concern to me.

When I did finally buy a house in my early 30s, I borrowed less than I was eligible to (ie less than three times my gross salary) and my mortgage lender actually checked my employment details, hence my creditworthiness. Having sensibly limited by borrowing, I was able to pay the mortgage off fairly quickly.

It became obvious to me that there was something wrong when the income multiples being loaned started to rise to four and then five times gross salary and self-certification of credit status was introduced.

I therefore expect house prices to fall in real terms back down to the level of three times average gross salary for every part of the country. The only question is whether there will be a short sharp crash or a prolonged decline in prices before they finally bottom out.

Paul, Coventry,

This smells to me like a storm in a teacup. I have weathered previous calamitous times with my property & at one time,95% of my income went to pay my mortgage. For those who have bought in the last 3 years, it may be a time of great concern as well as for those who have borrowed recklessly or illegally.

However, the UK is a an island and will also be so. There will always be a larger number of people needing homes than there is space for them. Therefore, homes will always retain & increase their value in the long term & any short term "fears" of loss of value can be beaten by those who don't panic.

For those forced to sell for reasons outside their control, it is not for them to cry over any loss of value for they are not to blame. They cannot blame themselves for factors outside of their control & one day, they will recoup (and more) any losses now, as I have done with my property. Also, for those selling and buying, they should see a commensurate drop in the home they are buying.

Anthony Ravasel, London, W3, UK

Readers of this column may be shocked to read that as well as borrowers being able to borrow without proof of income , the lenders do automated valuations too ( where there's a large deposit, usually 25/30%) which means some loans will be on properties that the lenders surveyors never see and may be unsuitable security.

The market is correcting itself and will do so for a couple of years yet
Reasons - people overborrowed when base rate was 3.5%.
They took short term rates then meaning a "payment shock" when they came out the other end when base rate was 5.75% !! In some cases mortgage payments went up 60% particularly for those on interest only mortgages.The rise in % terms for repayment mtge holders was less.

The credit crunch now means that all the sub-prime borrowers who have ended up with faceless organisations cant get remtges and they are stuck on high rates thus facing repossession.
Lenders shying from new build buy to lets
125% mortgages schemes abolished

Bob, Denham, UK

The nationalisation of the Northern Rock is the nail in the coffin of the housing bubble. As of thursday all 125% morgages have ceased to exist...so what will present holders of these morgages do when their term comes to an end. Somehow find £30,000-60,000 to fill the gap...I don't think so!

All the property speculators of the last few years are going to get horribly unstuck...and hopefully de-smugged!

I am a flat owner myself in London, but can not justify the recent rises in it's value (5 year view). I know I should sell now and bank the £200,000 gain in value...but home will always be "home sweet home", no matter the price!

Christian, London, Uk

The sooner house prices fall back to sensible levels the better. When they have bottomed out, then I shall be trading up!

Paul, Coventry,

As far as I remember the Dresdner guy says this since many years. As with subprime in the US few FACTS are really available and reported so most commentators resort to doomsday speculation-bad "news" sells.Sure there are problems, BUT: comps with US are very inadequate(supply of land), lending standards have become quite reasonable and RPinflation will slow down with economies as shall commodity prices. In most property market downturns there are areas of strength/less weakness:Germany is flat since 15 years but prices in top locations have double/tripled during that time too! The good things coming out of this should be better high street shopping b/c of less agents offices, a reevaluation of property as a home instead of a speculative object and a refocus on location, rental yield, land value and square footage instead of condition during valuation.

JGB, London,

Alistairs Solicitors, Bristol, UK

Prices in London have not dropped by 17.5%. I would say June to August 2007 was the peak (with a late rally in December). I must say at this point that I was baffled with my my own professional body (RICS) claiming , that values would continue to increase. All the surveyors that we panel to never held this opinion.
Values being achived for mortgage purposes are down about 2% from last years peak. Estate agents however are still pushing the market up with increased asking prices but todays buyers are fairly clued up. If you can get to see Lonres data base or UK Valuations used by surveyors you will see what the market is doing. Land Registry is very limited in the data that it provides. With the cost of borrowing still reasonable I still maintain that the level of employment will dictate how far the economy and house prices will dive. Should we see a signifcant increase in unemplyment then a 17.5% drop in values may well be conservative.

Joseph, London,

Joseph,

Are you sure its only 1-2% dip? The Land Registry say tha tin the last quarter what you refer to as a dip was 17.5%

Would you like to comment?

Alistairs Solicitors, Bristol, UK

The UK housing market peaked in July last year.In the same month,the RICS stated that they would rise by 40% in the next 5 years.They don't seem to have a clue about house prices and whats about to happen to the UK economy.Mind you,the man at N° 11 isn't much brighter.

stephen hulton, eure, france

Joseph, London. I hope that you are a bit more clued up than you sound in your post. Last time around, following the early 90s crash, the banks and building societies turned on surveyors (and solicitors) suing them for unrecovered losses following repossessions, alleging overvaluing, complicity in mortgage fraud etc - indeed anything that they could think of to recoup their losses from relatively wealthy and/or insured professionals. You are being used and very likely will be 'abused' in the next few years by the hands that currently feed you. I suggest that you read the 'surveyors' chapter in Jackson & Powell on Professional Liability and then get out of there fast!

Clint, Stafford, UK

There is no housing shortage - we know this - three facts:
1) Rents have not kept pace with price inflation (and even recent slight increases don't come close to narrowing the gap) - it is therefore cheaper to rent than it is to buy a like for like property (in financing terms)
2) There is actually no real problem with securing planning permission (despite claims to the contrary) - we know this (and it will be born out in the up-coming reporting season) because all the major builders have land-banks with the equivalent of 4-5 years supply (that's plots with permissions granted) and this excludes additional supply already factored in to local area plans
3) People confuse the "I want" type of demand with the "I can afford" demand - the latter is the only demand that matters in any market and people are paying more for their housing costs than at any time since the last crash - so limited affordability means limited demand means big back log of properties to sell, means price falling.

Father Ignatius Brown, London, UK

Clive of Chichester - Spot on. Willingly support tax expenditure on how ever many prisons it would take to house the disreputable elements you describe. My concern is, would there be enough available building land? Once we start to reclaim the stolen and abused principles of a once decent society where would it stop. We would have to tackle:- Dishonourable politicians, an inept judiciary, greedy monopolies and a feral underclass - to name but a few.

Keith of Macc

Keith Hand, Macclesfield, UK

The recent housing market has been how the used car market was 40 years ago when HP restrictions were in force - to find the deposit the price was given a "Bump" - it just surprises me that these vast salaried city slickers have taken so long to catch up, and been found out - it's all a con - pathetic!

Marty, London, England

the fun is just about to come!

riccardo, brussels,

As a Chartered Surveyor that values for all of the major banks in West London, so far to date property prices are remaining firm with some areas showing a small dip of between 1 - 2%. The banks will do all they can to maintain stability in housing as will the governement, as the housing market is an economic and political time bomb that sadly our country greatly relies upon for economic growth. It is unemployment that needs to be monitored and we will not see the effects of the credit crunch on employment until much later on in the year. As things stand then I predict that the London market will remain flat with a small drop in of say 5% this year and possibly the same next. Elsewhere, well new build flats in the likes of Leeds, Manchester etc will take a hammering, with 5-10% falls on all other properties, As far as first time buyers willing a crash to get on the property ladder well forget it. There are a lot of people out their that are cash rich. Good luck all the same.

Joseph, London,

It now seems likely that a large proportion of 'Self Certified' and 'Fast Track' mortgages have been obtained by the applicants overstating their income, which is fraud. This may, or may not, have been done in collusion with the applicant's mortgage broker or lender, which is conspiracy to commit fraud, a very serious offence. All such mortgages issued over the last 5 years need to be thoroughly investigated and those who have behaved in a criminal manner should be prosecuted - the only problem is that the government will have to build a lot of new prisons to cope!
(Isn't it strange that this sort of problem has only surfaced now that house prices are falling - nobody complained while they were rising...)

Apropos 'My word is my bond' - the last time I heard that was from the lips of...Arthur Daley!

John E, Eastleigh, UK

Brian Roberts, Oxford, UK. Well said. I'd happily support my tax revenue being spent on a couple of new prisons to house all of the dodgy mortgage brokers, surveyors and solicitors who have been complicit in widespread mortgage based fraud. Only by coming down hard on professionals who have to be trusted for the market to work will we have any chance of stamping this out in future. And, as well as decently long prison sentences, let's ensure that these (ex)professionals spend at least some of their sentence in 'proper' prisons, rather than going straight to HM Prison Ford holiday camp on the Sussex coast.

Clive, Chichester, UK

I don't pretend to know the first thing about economics but I have to say I'm praying for a housing crash as it is the only foreseeable way that I, and many other graduates will be feasibly able to get onto the housing ladder - that's unless the interests rates on the loan I had to take out to fund my postgraduate studies don't cripple me first.

Sarah, Sheffield,

So the FSA has decided to get up and actually start doing something although little and much too late. I cannot believe for one single second they didn't relise that the UK housing bubble was based on huge over lending and mass mortgage fraud. The entire pyramid is built on fraud.

The FSA cannot of NOT known what was going and is still going on. Its impossible they didn't know.

Wake up people house prices are going one way and we are just behind America.

Ade, UK,

We have lived in our present house for 22 years, during which time our three children have moved out into their own accommodation; we haven't down-sized because my mum moved in after my dad died. One of our next-door neighbours downsized after their four children moved into their own flats. There is no net increase in population with our two families, but we have gone from occupying three properties to nine. The same is happening with all the other people who have lived in our street over the past two decades, i.e. their children have grown up and moved out. I work as a carer and see people in their 70s, 80s, 90s living alone in two-, three-bedroom properties; they have raised their children in those homes, their spouses have died in those homes, they are mortgage-free but will not downsize for sentimental reasons. We can have a static population and still need an increasing stock of affordable housing.

Steve, Aberdeen,

Part of the problem IMHO is those 1st time buyers looking for a 'starter home' in the 'right' area... taking out a 20 year + mortgage on a home they intend to live in for 5 years at the most (as little as 1 or 2 in some cases) as they wish to make a profit. It is these (genuinely) overpriced usually newbuild homes that seem to be making the biggest loses. My partner and I have just bought a lovely 3 bed house in a so-say 'bad' area which we can comfortably afford and can live in for oh, at least 40 years. Compare this to our friends who a year ago purchased tiny, 2 bedroom houses which are now dropping in price rapidly and which they are now doubtful they will be able to afford to leave when they had originally planned to! They may be my friends but I have no sympathy, greed and snobbery caused their problems and will continue to do so!
I know this is a simplistic opinion that does not take certain economic factors into account, but it IS what is happening!

AK, Swindon,

If we don't have enough homes we should be seeing a surge in the homeless. This is not the case. We don't have enough low value homes because land is over-priced. Once the housing correction takes effect this will be resolved. The developers are already mothballing proposed developments as a result of the over-supply. The interim state will potentially be city ghettos where no one wants to live.

M Lyon, Leeds,

The American housing market is collapsing..which our financial peoples invested heavily in..
The great bear...bank [swindel].
The.northern rock collapse..now shored up with taxpayers cash [nationalisation]..
And now our own housing markets collapse..and some think oh what a killing we will make in 2010..

Wake up people..our economy is in meltdown..and if it cant be stopped..we will be wheelbarrowing our monies..to the bakers for a loaf of bread..

colin johnson, glasgow, UK

There is some mad prattle on this blog. The housing market will remain robust as long as people have jobs. It is those who need to get on the ladder which is cause for concern and this is due to some of the tactics to sell up to that segment which is of concern. If an overall slide happens (like many bloggers yearn for) then interest rates must move downward quickly - consumer confidence after all is about how well off home owners feel they might be in 12 months time. Low confidence will slow the economy and create redundancies, and there just is no need for that with inflation around 2%!!!

In a climate where external pressure is creating slight inflation the choice is to live with slightly higher inflation/ lower interest rates and avoid a stagflation/job loss scenario, the alternative is a series of blunders. Perhaps a general election on the horizon might refresh the UK's perspective of itself???

RobD, Bracknell, UK

economic meltdown is on the way..by the sound of current world economic.and financial affairs..

colin johnson, glasgow, UK

Jill - rents are increasing as less people can afford to buy. Students can now expect to pay £400 pcm in Bristol compared with £300 less than a year ago - so the landlords with multiple mortgages will continue to be the ones who benefit!!

We bought our house 3 and a half years ago as first time buyers, 100% mortgage - at the time we took advice and thought we were doing the right thing. Houses in our road are now selling for £60K less than we paid for it - and those prices have dropped in less than a year - make of that what you will! We have also made the mistake of doing it up 'too' well, so people will not pay for the quality - my advice - buy cheap and leave it as it is!! We wanted to sell and move out of the city, but now face staying where we are for the foreseable future, or renting our house out to avoid losing a significant amount of money. We definitely learnt our lesson - property isn't the safe option!!!

Louise, Notts,

If there's a housing shortage, then why are rents not increasing or at levels as high as mortgage repayments? Why are there around 700,000 empty houses in the UK? We don't need to build 'affordable housing' for FTBs - prices need to come down!

Jill, London,

Malcolm - No shortage of property in Aberdeen.

A quick walk around the west end will show you about 1 house or flat in 10 to be empty. And this WITH $100 oil. North Sea is fully developed, nothing else to be done - a bit of infill drilling maybe. Aberdeen oil-related population is at all-time maximum now.

Top of the market was in July 07. What there is a shortage of now is properties FOR SALE as the market has become constipated. Seems the buy-to-leave sector is slow to get the message.

I expect things to change dramatically on 6th April. Downturn will take 18 months to 2 years to play out. Keep your powder dry, save as hard as you can and get ready to pick up amazing bargains FOR CASH in early 2010.

McGlashan, Aberdeen,

Sonia from Ilford, "follow the cash" an old saying and true for the housing bubble and soon to come crisis. Regulators did not curtail the morgage lending madness-multiples, regulators have to enforced building on land allocated bought by property developers, regulators do not free up further land for individual to build their own properties, regulators did not enforce existing building standards - who controlls and employs the regulators? Who receives donations from various parties of the property trade.....follow the cash!

Timur, London,

To really understand the current state of the market, look at the facts. As shown on Rightmove, in the Weybridge/Esher/Cobham area, there are an astonishing 150 houses for sale over £2m - with very few buyers. In addition, for all the chat about lack of supply, there are a further 100 new-build £2m+ houses in the area due to come on the market in the next 12 months. No wonder, agents are quietly soliciting offers at 20% - 30% discounts to asking prices. Scary.

John, Weybridge, UK

The people that use the "demand outstripping supply" argument to justify a never ending rise in house prices are nothing more than economic neanderthals. Their arguments are never backed up by any form of financial justification, and if they should ever try to find some, they would fail.

The invisible hand will eventually come to the rescue of the prudent saver who's currency and income has been sold down the river by "No more boom and bust" Gordon.

Watching it happen is going to be educational for the "demand supply" gang.

Stuart, London,

If we are so short of housing in this country, why is it that you cannot drive through a major town or city without seeing rows of perfectly good houses boarded up? Surely we should be looking at what is sitting empty before we start ripping up green field sites. Also as an employee of a well known mortgage bank it might interest you to know that the police are not generally interested in mortgage fraud and that it is up to the Company concerned to have sufficient safeguards in place. Can anyone tell me of any individual they know who has been prosecuted for mortgage fraud? I am also sick to death of programmes like BBC's Panorama which feature people who admit to falsifying documenation to obtain a mortgage and then blame the bank when they get into trouble.

carol, Leicester, UK

House price growth over several years has been blamed on a shortage of supply, not true! House builders are consistently building flats and low-end houses, which is all you see. If it was true, rental prices would have increased at a similar rate to sale prices, which is simply not the case.

The true reason for the first-time buyer not being able to get on the ladder is buy-to-let investors; they are chasing the same property driving up those sale prices and keeping rental prices down through over supply. Buy-to-let is simple market speculation on capital gain with the rental income covering interest payments. Price growth is driven from low-value stock upwards to the top-end, this pushes up the rest of the market.

Unfortunately for everyone greed, the herd-mentality and belief that there is only one direction for prices has created an imbalance in the market. This will in the end, sooner or later unwind whether it being by crash or stagnation.

Paul S, London, UK

there is no fraud, just people borrowing irresonsibly. and we need a crash of atleast 70%

fred, cardiff,

Not enough homes? I live in the affluent SE and virtually nothing has sold in my area for months - amazing if there are really so many 'homeless' people clameriing to buy. What's more, the house next door to me has been up for rent for weeks. The rent is very reasonable for the area - yet no takers. Amazing, given the apparent shortage of property. Think back to pictures of genuine shortage - food lines say in the old Soviet Union. Get the point? Genuine shortage involves lots of people clamering for a few available items, not available items staying on the shelves for months. There is no housing shortgage in the UK. Developers have conned the government into believing that more houses are needed, but of course building these will just execerbate forthcoming price falls. The panic by vested interests is just palpable - sad really, so much to lose and absolutely nothing that you can do about it.

Graham, Oxford, UK

Just put my house on the market in South London. Agent said he could have got over £300,000 6 to 3 months ago. He valued it at between £290,000 and £270,000 now. Draw your own conclusions!!

Triston Claydon, South London,

We do not need any more Cassandras around. What is required is a more prudent approach to mortgages - perhaps here the Danish example is a good one. While Northern Rock was trying to make in roads into the Danish market, it was obvious to people in the industry that they were "discounting" on the back of very poor liquidity. As H. Clinton said recently - it was all hats and no cattle. This is a great pity because they had in their past been more prudent.. We also have to remind ourselves time over time, that we are not talking of just houses, but homes.

Stephen Pain, Odense, Denmark

Advice to all those who have assumed that house prices will just keep rising and rising........read a publication ot two from fred harrison. I'm someone who simply cannot afford the size of mortgage that is needed in oxfordshire, and i earn more than the "apparent" national average wage. However, i had a broker inform me that i could get the mortgage i wanted! It was my decision not to go for it, as i knew i would have been hopelessly over stretched..........my best decision ever looking at the current turmoil. The last few years of all these companies selling 'buy to let' schemes should be outlawed. Over inflated prices, finders fees, discounts that are nothing of the sort............i could go on. They are all corrupt and dont care about anyone but themselves. The only thing i will say though, is that anyone stupid enough to have been taken in by these companies will learn a harsh lesson, and its no ones fault but their own.

Darren, Oxfordshire, England

Once again another shock story that quite frankly is again misinformed information. The facts and they are facts are that we havent enough homes and we are not building enough, we dont have enough low value homes for first time buyers and letting is going up as it should when price rises slow, we confuse the market by reporting drama and not facts and I believe that if we all agreed and said perhaps we are not building the right homes rather than we are going to have a housing crash then we may be more accurate.........does this not sound more realistic and sensible???

Craig Inglis, Glasgow,

It is right, and long overdue, that the FSA goes after such people but what about all the City Bankers who came up with CDOs, DLs, SIVs and all the other clever ways of repackaging subprime lending as triple A rated bonds!? Many of them are walking away with multi-million pound bonuses on top of the millions they have already made just as the Western economy is about to go into meltdown!

If the FSA is to show that it has any value the Public needs to seem some high profile Banker scalps hauled before the Courts in the next year! Will that happen - of course not!

Jan C, Swansea, UK

“We believe it is payback time for years of speculation and sharp practice,”

Hallelujah! At last there might be a chance for honest savers to own a home instead of lying fraudsters with 10 maxed-out credit cards who use 125% liar loan remortgages to keep tthe repo man from the door. The last 5 years of property madness have benefited no-one but fraudsters and cheats who are reckless with their finances. For the rest of us who believe in living within our means, it has been a nightmare of priced-out exclusion.

What I want to know is: why didn't the FSA pay more attention to this to begin with? If they had, the government would not now be sitting with a bundle of toxic Northern Rock 125% liar loan mortgages on the public balance sheet. It's truly tragic that honest taxpayers are being made to foot the bill for idiots who lied to buy houses they couldn't afford.

MB, Edinburgh,

In Aberdeen, there is still genuinely, in my opinion, a relative shortage of housing. However, what I think will happen and hasn't happened fully yet, is that many of the "buy to let" owners, will see prices starting to fall (which they are now doing to some extent), and want to sell off. Then there will be the cumulative effect of more houses coming on the market, perhaps combined with a slowdown in the economy resulting in possible job losses, resulting in less people with money to spend, resulting in more businesses struggling, resulting in a collapse in the requirement / turnover of houses as people loose confidence. Then we have a real problem. Aberdeen however, is a bit of a bubble due to the oil industry and therefore any downturn may take longer to hit.
However, any shortages in the market are in the "affordable" sector as house prices in Aberdeen particularly, are overpriced and I think we will shortly see a considerable "correction" as the slowdown bites.

Malcolm, Aberdeen,

Housing shortage? As far as I know the population of the UK has not increased so dramatically in order that the prices of houses should rise in triple digits. Unemployment is often quoted as low but the methodology of measuring it means that the figures have been revised downwards for years. Also, if you exclude the typical minimum wage or burger flipping jobs then you will find unemployment at the same rate as it was at the time of the last property crash.

The fundamentals are shaky in my opinion. Economic growth in recent years was based on a faery- land credit bubble at the consumer level and exotic financial instruments at the institutional level. There was no real industrial or service sector growth.

Jack, London, England

The problem is that one and two-bed flats are being built everywhere when what people really want is three-bed family houses priced so that a family can afford them. There is lots of land on which houses could be built if only planning permission could be obtained from nimby local authorities. Only around 7% of land in this country has houses on it.

Sonia Gable, Ilford, UK

About Jonathan's comments - what you say is not wrong but the fundamental problem is affordability. We will see that less people will want to look to buy and stay with families, and not wanting to move to a bigger homes because house prices in the UK are over valued - house price inflation is far faster than RPI. We will also notice that people start to migrate else where in search for a balance of hardwork, life and mortgage

Lin Roger, London,

I have personally experienced three major housing recessions during my working life. In the first I was offered five georgian houses in the south of england for the price of the legal fees in the second I bought a house at auction for 60% of the valuation where I was the only person to attend the auction and in the third I bought a repossessed house for 40% of the price that the previous owner had paid four years earlier. I have been warning that this situation is likely to happen again for the past few years but most people seem to be in denial as to the reality of this potentially volatile market. Governments should create mechanisms to restrict and slow this mad rush into property every few decades and to ensure that housing remains generally affordable. Bust and boom in the property market makes a few rich but destabilises the economy for most of us.

tony, maldon,

jonathan, London - The fundamental fact with the UK market is that there is an overall housing shortage across the UK.

Absolute nonsense.

UP TO 35% of Liverpool’s new city centre apartments are lying empty, as an already flooded property market struggles to attract buyers.

“A thousand flats lie empty in Leeds and in some cases are being sold for £100,000 less than what was paid for them.”

I have never had a problem renting a place or viewing a house to purchase as there are plenty of places to live. There are two houses for sale down our street for 6 months now, but they are asking too much for them. Even with a 15% deposit the rent is still cheaper than an I/O mortgage. Why have they been on the market for 6 months now if there is a housing shortage ? Surely they would have been snapped up if this was the case.

The true unaffordabilty problem lies on the door step of BTL investors, mortgage fraud and cheap money that was created with low rates by the BOE to fuel a consumer boom.

Mark, London,

The "shortage of property" argument can be safely ignored. Sounding good superficially, it is one of those examples of false logic ("there is a shortage of property, therefore any price for property is justified and property prices cannot fall") which helped create the bubble in the first place.

Roger, London,

The UK being a wealthy and densely populated small island means property will never fall … delusional …. look at Japan from 1990 - 2005, that should put the fear of God into any property investor. And don’t think that low interest rates will bail you out, Japan’s have been at around 0% for years, hasn’t helped. It isn’t about the number of people that want a house, its about their ability to get finance. The only way the property market is going to continue to grow is if finance continues to become easier and easier to get. Not going to happen.

Andrew, London, Australian

If your a priced out first time buyer who thinks hes going to buy after the crash your misinformed to say the least.

The housing market will be sustained, if not expanded at all costs.
It is your cash saving that are going to take the kicking.

Dominic, Manchester, UK

"...it had banned a further two mortgage brokers for submitting false applications to lenders, in what appears to be a growing trend...."

Has this really only just been noticed by the FSA? If so, then where has the FSA been for the last 7 years (say at least since the Cambridge Econometrics Centre said that prices were 21% overvalued in 2001)?

And more to the point where has the Bank of England been with their counter-inflationary policy?

Alistairs Solicitors, Bristol, UK

For god's sake, don't let Anne or Judith read this appalling gloom-mongering.

Isn't it self evident that our houses should increase 3 times faster than than our salaries ad infinitum?

T Sparks, Limerick,

Arguments about under-supply of housing supporting house prices only make sense if there is corresponding effective (ie monetised) demand. Nationwide reports that the average ratio of a first time buy to a first-time buyers gross salary is now over 7 times (ie if the salary is 25k, the house will cost 175k). Given the average young person has debt rather than any savings this appears a bit unsustainable. The only thing supporting this at the moment is the bizarre assertion that house prices will always go up faster than inflation and that therefore you must get on the housing ladder asap, even if it is patently unaffrodable and involves getting a 100% mortgage.
Speaking of vested interests - is Jonathan in London a homeowner by any chance..?

Adam, London,

There may be a housing shortage, sounds entirely plausible & that would of course have an inflationary effect on prices but I think its influence has been greatly exaggerated. What we've seen over the last decade, particularly the last few years, is a speculative bubble. Unfortunately it's a speculative bubble that is, to a great extent, propping up the economy so the Government are going to do everything in their power to keep the band-wagon rolling.

Also, whether you think stories like the above are "scary" or not depends on what side of the property divide you are on. If you're a priced out first-time-buyer or a young family trying to start a home it's the prospect of inflation continuing unabated that is the "scary" thought.

Paul Topham, London,

Jonathan from London. Please don't get taken in by this myth that there is a fundamental shortage of housing in the UK. If this was the case, why haven't rents gone up in line with house prices? Why have areas of the UK with net outflow of population also seen huge increases in house prices?

The unsustainable boom of recent years has been driven by cheap and easy credit and a view that house prices can only increase. Those two are now gone and house prices are going to fall.

JP, London,

''The fundamental fact with the UK market is that there is an overall housing shortage across the UK''

This is a myth, which Estate Agents and others with vested interests have used to talk up the value of Housing in this country. There are plenty of houses, the problem is that a good many of them have been bought by speculators, who should never have been loaned the money in the first place. The others have mostly been bought by those who want second homes, again on the back of dodgy mortgages.

I'm constantly getting email alerts from Right Move about new houses coming onto the market...the problem is that they aren't at an affordable price. !*$!

michael clarke, Windsor,

The high risk areas relate to the false market created by the buy to let market and the practice of using discounts from developers as the deposit / security for mortgages for buy to let properties. When the down turn hits areas areas such as Leeds and Manchester who's housing boom has been based on this type of development will be hit hardest.

Adrian, Midlands,

Why did the Lenders let this go on for so long? Most people on the Clapham Omnibus knew this was happening for many years during the house price boom.

gfplux, Luxembourg,

Joy, another so called 'analyst' trying to scare everybody.

The fundamental fact with the UK market is that there is an overall housing shortage across the UK. Planning consents are extremely hard to come across in most areas which is constraining supply and helping prices to hold up. Remember it was only last week that the industry wasn't building enough to meet the target of 3 million new homes by 2020.

Instead of 'investigating' the housebuilding industry its about time the Government investigated the practices of the banks, analysts and others in the financial sector and how they operate.

I wonder how much Dresdner has made as a result of shorting and betting on housebuilders stocks as a result of their analysts note?

The activities in the city are rapidly turning into a big game to make as much money as possible and to scare as many people as they can at the same time. There is only one winner here and that is the banks.

jonathan, London, England

We now have an abundance of new flats that are just right for office juniors but priced to suit senior executive pay packets.
Sooner or later a big downward correction will take place.

Kevin Herbert, Greater Manchester, UK

Gordon Brown has spent years crowing over his prowess of steering the Good Ship UK on the path of financial stability and growth. He is forever blowing his own trumpet about how brilliant and clever he is and that there is no more boom and bust. What we have witnessed over the last 8 years is the largest boom in living memory. But instead of building a nest egg for rough times the government and public have gone on a debt binge which has no precedent. House prices are going to crash. It has nothing to do with supply and demand. People can't afford the mortgages anymore and no banks will lend outrageous salary multiples. Securitisation requires a higher risk premium and this is passed onto the borrower. The UK is about to learn that ALL markets are cyclical, despite what Mr Brown thinks. Time for the greedy, irresponsible and the stupid to pay the piper.

Edward, London,

About time the media and public started waking up to reality. Pay www.housepricecrash.co.uk a visit for the truth.

Raj Desorh, Wolverhampton, West Midlands

The tolerance and perpetration of dishonesty in the housling market, and its incorporation into systems in the form of non-status mortgages has undoubtledly had a damaging effect on the image of the UK, and especially on London as a financial centre.

In modern Britain traditional values of honesty have significantly declined. 'My word is my bond' and a traditional tenacity to honesty, has been replaced by a politically correct liberalism which is too timid to challenge fraud. Tough punishments for fraudulent practices are essential if the UK economy is to operate efficiently, effectively and honestly.

Brian Roberts, Oxford, UK