This is really bad news! Only £4000? A drop of fourty thousand pounds would be welcome.

Tom W, Surrey,

Come on we've all had enough warnings, if you have failed to get your house in order by now then you only have youselves to blame. Own no property, owe no debt.

John P T, Reigate,

Plunge? £4K on £200K is hardly plunging, draw youself a graph.

C Byrne, Pinner, UK

Sorry that was aimed at Grainne Gilmore, Gary Duncan and Angela Jameson, three people required to write on article and still get it wrong.

C Byrne, Pinner, UK

It gets better, the cost of trading up gets less expensive every day. Roll on the next decade!

Paul, Coventry,

"Whats the problem? we have been 'making' 20% per year!"

Really? Unless you sell up and move abroad, or rent, you've made nothing as other houses have gone up also. Thats the great con. Its all paper money that only enriched the banks and the Government in the form of Stamp Duty/Inheritance tax!

Anthony, Brum,

House prices are a joke, £300,000 for a small 2 bed in 'trendy' Balham. To believe these prices will rise in value in the next 10 years is pure fantasy. Besides we should all want low house prices so we can all afford them as we all need to live in one! Stop dreaming = affordable houses for all!

Dan, London, UK

Thanks for the responses. Things are tough at the moment granted, but you need to look at the bigger picture. Property moves in cycles. DO NOT HAND YOUR KEYS BACK! Have we learnt nothing since the 90's?! Prices will rise again, flats are a fashion I do not consider part of the equation, only houses.

Matt , Leeds,

Trust me on this collectively my family and I have been investing since the 60's and have seen many boom and busts. If you are on the ladder do not sell, sit out this blip and you will be fine. For those sitting on the fence it is a buyers market, so buy! Good luck whatever you decide.

Matt , Leeds,

I think it is time to dig out what happens in the City.If you want to bet just to go to play BlackJack.I will never buy a flat/house/maisonette/pied a terre/mansion/etc in UK.Cons: Price/Quality/Surface/Drunk neighbours/Stamp duty/professional fees/mortgage.etc.God saves the Queen and the Upper clas

alessandro, London NW1,

One must remember that in any crash there is always an over-correction, so Eric's figure of £62.5k (based on 2.5 times average salary) for the average house may well be where it bottoms out before rising again to 75k as Stuart has said. The question is how soon will the price trough be reached?

Paul, Coventry,

We have the most expensive housing in the world, meaning wealthy foreigners are unlikely to buy second homes in the UK.
This just leaves the 1/3 of people who do not already own a property to prop up the market. Most of this group are on benefits or tax credits. Think about it.

Mark, Epping, Essex

Stuart, Sheffield. What the old rate was depends on how old you are. In the 60's and early 70's the maximum that could be borrowed was 1.5 x 'male' wage earners basic salary, over a term period of 25 years. Interest was 5 to 5.5% variable or 6.25% fixed and a minimum 10% deposit was required.

Richard Crow, Warsaw, Poland

Just to point out to the people saying it`s 300% up but only 4% down on house prices, that statement is misleading.
A £100,000 house 300% up is now £300,000. 4% of the increase is £8000. However a 4% drop is on the £300,000 price now so the drop is £12,000. 30% drop would= £100K

Kevin, Aylesbury, UK

Couldn't find Ms Fionnula Earley of Nationwide in the article. It is interesting to see her next comment. It is not only the younger generation (so called FTB) couldn't find mortgage they are also loosing interest in the property. 5-6% on 20k in bank is far better than 200k loosing 2.5% every month.

Somna, Croydon,

Does anyone know how they calculate the reduction in house prices? Is it the average (arithmetic mean) transaction value? In which case it is obviously affected by high value outliers or is it based on average mortgages advanced, in which case it depends on mortgageors atitude to risk.

C Byrne, Pinner, UK

If you have bought a house in the last 12 months with a 100% mortgage walk away now... hand over the keys... it becomes the banks problem. In a year you will be solvent again, save a large deposit and repurchase in about five years. In 1990 house prices crashed in Japan they have yet to recover!!

Mark, Epping, Essex

Where's Anne Ashworth these days?

Off putting her portfolio on the market?

J A Joe, London,

Matt , Leeds. Supply and (affordable) demand. As the scores of empty new flats shows, the idea of shortage is a myth. Builders already have completed unsold properties on their books and are losing money daily on them. They will offload them at a loss if they have to, further accelerating the crash.

George, Brighton, UK

In reply to Matt, Leeds, that entirely depends on what fraction of houses on the market are new. Also, land prices, and even building prices, are determined by where the house is built. I suspect most the houses are 'used'. Also, builders will sell at a loss if needs be, no matter what the climate.

Philip Stobbart, London, England

Prices won't fall that far I'm afraid. It may only cost £60k to build a house but the land costs £90k. The builder has to make a margin of 25% to make it a worthwhile business so his profit is £40k-£50k on £190k property. We have houses because people make money from building them.

Matt , Leeds,

Eric, Harrogate, The old lending rate was 3 times single income plus another or 2 and a half times joint income whichever was the greater.
Therefore a single person on £25'000 a year would get a £75'000 mortgage, up to 100'000 if their partner earned the same.

Stuart, Sheffield, UK

In N. Ireland, hit badly by the bubble, asking prices are holding (not fallen 30-40%). An estate agent told me recently she was advising clients to hold their prices! People here aren't the brightest but hopefully realism will prevail and prices will fall towards salary x 3 + 20%.

denis, belfast, n.ireland

Sorry everyone who bought into the Its different this time! mentality but inflated house prices don’t make a successful economy. The 2/3 of us who own property cant become wealthy by feeding off the 1/3 who dont.

A Harris, Kettering, UK

Kath, London. By all means wait until the next boom, but remember that those who bought at the top of the last boom had to wait over 10 years to break even (without even counting extra mortgage interest paid). This time it's worse so a 20 year wait is likely. Hope you're young and like your home.

Clint, Brighton, UK

Average UK salary £25,000.Average house price £184,000. Nearly 7. times average salary. When average house price reaches 2.5 times salary - the traditional mortgage lending multiple, house price sanity will have been restored. For those who can't do, or won't admit to, the calculation - its £62,500.

eric campbell, harrogate, uk

Not Enough. The public should access affordable living conditions. The B.O.E. should continue to squeeze the prices.
So far, good news, but more to do.

Sara Scherrer, Zurich, Switzerland

Ian, St Albans,

I hope that it works out for you, I just missed a situation like yours last time (by being born in '69, not '67) but I am so angry that Gordon Brown, Kirsty Allsopp, Anne Ashworth and others were able to get across the idea that it is different this time almost without challenge.

Bernard Bresslaw, Brockenhurst,

Good news at last then! Can't be much of a 'real' economy that relies on house priice inflation, and has previously been subsidised by billions in oil revenue (an advantage our European neighbours never had).

James, London, UK

Commonsense has at last arrived in the ridiculous UK housing market. Lenders are cherry-picking their customers, charging higher interest rate and demanding heftier deposits."
Commonsense and sensible lending has arrived back in banking - at last. Long may it last.!!

Mike, Luton,

Welcome back to boom bust Britannia. Don't forget in the early 1990s we were the poorest country in the EU.

barry dupont, brighton, east sussex

Everyone who couldn't afford to buy is gloating now. I bought at peak, but will not sell - I'll hold on until the next boom...the economy always goes in cycles, no different now. In a six months time, I might just take advantage of the lower prices and buy an investment flat too!

Kath, London, UK

Politicians/economists/banks have been pumping the market with cheap money for years.
They were all to busy lining their pockets to worry about the long term damage.
A trillion pound debt.Hows that growth! Paying off your mortagage..now thats growth.But no one wants you to do that .
I wonder why?

john wilson, southend, uk

Pat, Birmingham _ whilst I sympathise - why on earth should you expect to make money on your house? This is the attitude which has got us into this mess. The profit on your house is paid for by first time buyers who can least afford it, and now cannot afford to buy at all.

Louise, Hatfield,

Pat, Birmingham

Whilst I am sympathetic to your plight, why should your house make you money? It is this attitude which has cuased such a blight on the housing market. If you make money on your house it is not 'free' it is paid for by beleguared first time buyers - who can least afford it.

Louise, Hatfield,

And what about those people who have bought in the last 12-24 months and now face the real possibility of negative equity. I am in that situation, although i can keep up with my repayments, i worry that if i had to move for work reasons then i would not be able to sell my house.

Ian, st albans, herts

Lower house prices will be great. More money in our pockets to spend on ourselves in the local economy, rather on bricks and mortar.
Why people think that being asset rich but cash poor is a good thing amazes me.
Wouldn't you rather have money to spend on yourselves and family?

Gareth Jones, Dusseldorf, Germany

The BoE didn't act to manage house prices when they were rocketing upwards and creating a damaging asset price bubble so why should they act now to manage price declines? A decline in house prices will benefit many, but not the few who believed media hype and bought at the peak on 100% mortgages

MB, Edinburgh,

House prices rose 300% in the last decade.
Think about it 300%.So what is all the fuss about that they have dropped a few percent??
Gordon Brown and the labour party have once again proved that they are not capable of managing the economy.
Gordon Brown...........YOUR'E FIRED!!!!

James, London, UK

Surely given that consumers are in this mess through no fault of their own, the government should step in to help out by offering mortgages through its bank, the Northern Rock!!!

Sanjay Mazumder, London, UK

To Matt, London,

If you want to sell your property, perhaps you should consider lowering the asking price to a value that people can afford.

Andrew, Farnborough, Hants

Schafenfreude is never pleasant (except to the person experiencing it) but I've had years of listening to people bleat on and on about how much their properties have risen in value while being unable to afford to buy a place. I warned them that no investment goes up forever...

Kim, London, England

It would be criminal to lower interest rates at the moment. Inflation cannot be allowed to get any worse than it already is.

The state of prices in the housing market is an irrelevance. People need to understand that you cannot get something for nothing. If that proves to be painful so be it.

Tim Harrison, North Yorkshire, UK

Lower interest rates are the villian of the peace that got us into this mess in the 1st place. Lowing them for a country hugely in debt and facing higher inflation is the LAST thing we need. Even the halfwits in government must be able to see this. We need to take the medicine however unpalatable.

Brian Roberts , Plymouth, Devon

House prices could fall 30% and they would still be expensive. Lowering interest rates now will likely see a run on the pound and this devaluation will lead to runaway inflation. The less people spend on houses and repayments the more REAL money they have to spend on the wider economy.

John P T, Reigate,

Great news personally as i've been renting for the last 10 years. Not so for my friends who have recently bought with massive mortgages so no celebrating from me. Another lesson for the British public in treating your house as a home rather than an investment. Next crash 2026.

Nick, London, UK

Whats the problem? we have been 'making' 20% per year! A drop of 3.8% doesn't hurt us only banks!

andy, london,

Hopefully in the very near future those responsible for inventing and causing recessions will be asked to appear in court, before a good judge to account for their actions. Telling lies to involve so many people should equal many years in prison.

Giancarlo, London, England

Clive, unfortunately house price falls are not contained to that market. The bulk of the UK economy relies on personal consumption. Equity withdrawl figures have been huge in the past decade and account for much of the growth seen. Falling prices = wary consumers = much lower growth/recession

david, leeds,

What comes after Boom and Bust yes you guessed it Brown

Its the BOOM BUST BROWN economy just read the scathing OECD verdict on the government. Now every one's house prices are going into free fall you know who to thank for that.

Richard K, Nottingham,

If you've been on the property ladder for the last 10-15 yrs stop being critical of those who have only recently bought a property. I didnt hear any of you complaining when they you saw your property value unrealistically go up 60% in five years and then eak as much equity to pay for your lifestyles

James , Bournemouth,

so much fun!

riccardo, brussels,

Why doesn't the BoE insist on greater repayment rather than continually wanting to increase the cost of borrowing.

There is no moral hazard for the banks, if people had to repay more it would have the same impact on inflation. The current system screws the consumer.

Matt, Sheffield,

It just is astonishing that experts think that the tap will be tuned on again. When corporates hurt they slash their exposure -- and especially to a public who are either running the line or in fear of losing a job.

It will be months after banks feel safe that they will review their lend policies.

Paul, London, Canada

My house is still worth .... a house .

It cost no more than £50K to build so why would any banker in their right mind lend £183K with £50K as collateral?

Pedro, Stratford,

the Government should look at some of the "other" factors which are ruining the market such as pointless Home Information Packs which deter would-be sellers from putting their house on the market. I am not going to spend £1000 on something no-one will read, so get rid please.

Tom, London, UK

It matters not what the BoE does. No one has faith in them. Especially the high street banks! All banks see the BoE is as free money at the moment to prop up their wild lend policies!

Paul, London, Canada

Cutting interest rates will make not difference because the banks are not passing the rate cuts on. Infact, in many cases they are raising rates to dissuade new mortgage applications.

The UK housing market is utterly doomed. I reckon 30% drop in the next 18 months is very likely.

Mike, Beijing, China

Commentators with a vested interest in the market will always understate the real position. In N Ireland we have already had 30 - 40% falls and still falling. Do some background reading about Japan in the early 90s. Sensible correction would be good. Collapse would be a nightmare.

Observer, Belfast, N Ireland

I wonder whether this self-righteous gloating about people who "borrowed more than they could afford" comes from finance gurus who predicted the credit crunch or from people who only a few months ago were bitter and envious and would have jumped at the chance to buy if they could have afforded it?

Jamie, London, UK

The Halifax's own figures for average prices are:

May 2007 - £196,636
May 2008 - £184,111

That's a 6.36% drop year on year, not 3.8% as they claim!

David, St Helens, UK

Take a look at the Halifax figures on their website. They "smooth" the year-on-year figure on their press releases. Go into the data and you'l see the price in May 07 was £196,636. Now it's £184,111. That's a 6.4% drop, not 3.8%. PD - the reason Brown won't do anything is that he owns Northern Rock!

Jim, Enfield,

Everyone can now surely see the folly of basing the UK economy on house price inflation underpinned by cheap credit. Utter madness but then it illustrates how little else there is in this country apart from the City that can create growth. House prices now to fall around 50% over the next 4 years.

chris, brighton,

Cheaper houses, sounds great to me, roll on the 20% fall

Gavin, London, UK

I'm not sure where the 3.8% figure comes from .. I'm in the process of selling my house in Birmingham for £100,000 less than its £350,000 value last summer.. In fact considering how much we have spent on the house we will see no tangiable increase since we bought it in 2002... not very happy!!

Pat, Birmingham,

Anyone could have predicted that house prices were going to fall this year.Why try and hold them up when they're 30% too high?

stephen hulton, eure, france

When will the government actually admit that house prices are too high, and that a correction in the prices is the right thing? A propping up of the housing market is not in the best long-term interests of the country. We do need a correction so people can actually afford a house to live in.

PD, Southampton,

People who've been in the same house for a few years WILL NOT lose money. The house price will simply drop to where it was a year/two ago. People never physically had the price at the top of the market.

Hence, no real problem with prices falling. As Barry Wiseman says, we need to think long term.

Clive, Surrey,

Interest rates weren't put up when house prices were increasing, so why should they be brought down now house prices are decreasing? Inflation is rising, therefore interest rates should go up. For all those who borrowed more than they could afford, it's time to pay the piper I'm afraid!

Andy, Bath,

Why cut rates when it is credit availability and the expectation that prices will fall that is fueling the downward trend of house prices? Prices are far too high - at least 30% too high. Cutting interest rates will only increase the already out of control inflation.

Simon, London,

Housebuyers need to realise that mortgages can no longer be linked to the Bank of England rate,Its a case of supply and demand.Lenders are now more cautious as to whom they lend to,so having got a mortgage,you cannot start demanding your repayments should be lowered.Savers need a fair deal too

David G, Altrincham, England

I was planning to buy this Fall but now I have postponed 'till the end of next year;- that's how I see the UK housing market... Much like parts of the US - there is a housing correction. Sellers in the UK need tips on curb appeal etc. Gone are the days of assuming your home will sell easily.

Pat, FL, USA ,

Wake up Bank of England! Any cuts in interest rates will have no affect on the slow down in housing market . House values will continue to fall; my guess: 15-20% over 2 years; and this from someone who, 5 years ago, fixed his mortagage for 10 years...ha, ha, ha.

Philip T, Leeds, UK

please, no more post about chickens and roosts, be inventive and think of a new analogy everyone, if you bought 10 years ago your house is still worth 96.5% more now.

Andrew Wakeling, London, uk

Houses are over valued and over priced. We don't want a crash, but we need a correction. People who have borrowed more than they can afford need to take responsibility for themselves and ask the question why they did this.

DH, Newport, IOW, UK

Three offers on my property in London all of which have fallen through because the buyers can't get mortgages. Our estate agent said that one couple were only able to gain 2 times their come based on a 15% deposit. They can't move into London and we can't move to our new postings out of the M25

Matt, London,

Lowering interest rates will only get us brits back on another credit/ property binge. We need to think long term.

barry wiseman, bromley, kent