The author writes that this crisis emenates from the US. It doesn't when you dig a bit deeper. UK households have been dissaving recently compared to 10% savings rates in Germany and France. UK household debt is very high now. It's not just banks that have to strat living within their means again!

Richard Schreuder, The Hague, The Netherlands

If you’re a first time buyer then a 40% drop in house prices is OPTOMISTIC, not pessimistic.
Lets look at this from the correct angle, and admit that 6 x salary for a house was a sad reflection of everyone’s GREED -so lets not bleat on as if house price collapse is, in the long run, a BAD thing.

Darius Midwinter, London,

Yolanda's argument that prices won't fall 40 % because people have lots of "equity" (primarily the result of house price inflation) is a bit like arguing that prices will remain high because the have gone up.
PS The supply of land in Japan is fixed, but has only gone in one direction lately(down).

ralph feldberg, milan, italy

If I were hoping to get on the property ladder I'd say that hoping for a 40% price drop would make me an optimist!

dave, kent, UK

The argument of finitive land supply is rubbish: How would you explain the absence of housing bubbles in Belgium or Switzerland? Do they have a secret moon base?

Carl, London,

Perhaps Ms Barnes wants to carve herself a career and the great property contrarian, in 2007 she was upping a market that was set to crash she predicted a rise of "15%" and no crash is sight! (Independent 6.01.07) One wonders why she needs to make spare cash writing for a newspaper?

Heiko Khoo, London, UK

But do we really *want* another ride up and down the house-price roller-coaster? A few may win out by down-sizing in time, but for most it's agony. BTW *house*-prices don't rise and fall; it's LAND-prices that do. Any competent RICS memeber should know that! Bring on Land Value Tax! End boom-bust.

Conall, Margam, West Glamorgan

There are To Let boards and For Sale boards everywhere yet I see nobody sleeping on the street. Where is this housing shortage? Prices must fall.

P. Wilson, Brighton,

UK house prices have already fallen 40 percent in USD terms. Expats and owreign currency will start looking this spring, but they are not looking for bedsits in Bradford!

William, Guildford, UK

Limit all mortgages to 3 1/2 times income, and keep it there.
Prices will adjust. Have special provisions for recent buyers.

Dave, Wrexham,

"Land is finite"

Thanks for pointing that out, but the only way this makes a difference is if the population grows uncontrollably or housing disappears.

Population growth = (Births - Deaths) + (immigration - emigration)

I don't see people on the street because there isn't enough housing...

steve, Leeds,

What about the Japanese housing market? They are even more short of land than we are and their house prices haven't got to anything like the level they were before their bust.

John, Tonbridge, UK

Why are rising house prices good news to anyone other than for sales price commission based agents.
Surely in a service based economy such as ours, where we need fast circulation of money to ensure a beneficial multiplier effect, for more and more cash is lost to mortgage payments is bad, not good?

rick, manchester,

So a proportion of that total capital is competing......to BUY OTHER PARTS OF THAT CAPITAL!

Yes, it's that stupid. My ten friends have all borrowed money to buy a car each. In the past year or so many of them have paid off the loans. So when we all sell our cars to one another.....

Andrew Sales, Greville, Buckminstershire

Yolande? Can I interest you in buying the plans to a revolutionary new perpetual motion machine? The pessimists may tell you you can't magic value out of thin air, but I know you know better!

Andrew Sales, Greville, Buckminstershire

This 'expert' from Savills did not predict this bust, so what value is there in this article relating to the future. Call me suspicious, but do I even detect just a hint of some positive 'spin' from this property company employee?

david franks, chonburi, Thailand

Realists not pessimists! My wife and I lost our jobs and we have been able to find jobs that afford us a joint income of 54% of our past incomes. Now we must sell our house and dream of a time when we might afford to buy again.

Philip Ross- Hanley, Windsor, Berkshire,

There is still another 'tsunami' to come, and that is bird flu. When that hits it will dampen the economy for another couple of years.

Jim, Auckland, New Zealand.

Yawn, yawn....... you speak, but who's listening......

AT, Tunbridge Wells,

Fact: As credit dries up the money supply is reduced and price deflation occurs (hence central banks have been pumping money into the system).
Fact: Asset price falls exacerbate deflation.
Fact: Both are now occurring.
This is why Govt has cut rates so much and why they are planning fiscal stimulus.

JB, Seef, Bahrain

YB is wrong.
The UK RE bubble had % prices rise much more, in the last 6 years, than in the USA. Plus the average UK consumer took on about 35% more overall debt as a % of annual income than their US counterparts. Thus the UK RE fall will be faster and deeper than YB anticipates.

Ian, Madison, USA

Do you really believe anything that an Estate Agent says?

Anthony Price, Truro, Cornwall, UK

The fact is that we need Banks to assist us, just like we need to work hard to get better things. How can a 25 year old have saved suffient funds to buy a house from the start of his working life? Rent can be as much as mortgages. People needs the banks help to feel a sense of achievement.

Matthew Patterson, Oldham, England

She fails to understand the roots of the current crisis and thus waht will happen. Sub-prime, house price falls, job losses are all symptoms of global overleverage caused by money being too cheap for too long. What must now happen is that the world must deleverage which means all asset prices fall.

Tim, London,

I spend 50% of my net income on housing. So does anyone under 30 living in London, and we all rent.

Peter G, London,

A thinly veiled attempt to improve the prospects of her employer. There is only one way for property prices and that is down, at pace! The reality is probably 12 years from peak to peak in prices. So don't hold your breath Savills.

John, London, London

This was a credit bubble not a property bubble. People in the UK have been able to borrow abnormal amounts of money over the last 10 years. They came to rely on it and base their budgets on the continued availabilty of this credit. The credit has now gone, and they will thus go bankrupt.

Jon Pratt, Reading, UK

I live in the south east, average price is £270,000, but the average salary is 25-£30,000 for first time buyers. 30% drop in prices would bring average down to £190,000, still overpriced. 40% drop would bring average to £162,000, ahh lovely. Yolanda baby it is gonna drop 40%, sooner the better

richard, brighton,

There are 2 parts to the housing drop, the first is the credit crisis, which has been more or less instant as banks stopped lending to most prospects.

The second will be the slow grind of recession that will act over the next year or two. Can banks loosen lending criteria again in a recession?

Matt, Cardiff,

The lower the proportion of our income spent on housing the better. No mention of council tax & utilities squeezing income disposable on housing.

Rents ARE coming down and never rose in line with purchase prices.

Those with interests in property should stop trying to scare others into buying.

Steve, London, England

I have just seen some research by another estate agent John D Wood which shows prices in central London down by over 20% in the year to July (at least they are honest). Since then prices have fallen even further.
Japan has had falling prices for 17 years. Prices will rise but it could take time.

Peter Hewitt, London, United Kingdom

"... if land supply is finite ..." Is it? Certainly true in London, but not in Liverpool or Manchester, where huge regeneration areas and brownfield sites are lying empty. There is loads of space to build houses in these cities.

Peter, Liverpool, UK

Only a complete mug is thinking of buying now. Everyone knows that if you buy now, you'll be in neg.equ tomorrow and it'll be worth 75% of what you paid for it this time next year. Nothing else to be said.

Micky Kalou, Exeter, UK

Rubbish- demand does not take into account affordability. And as the country's banks become ever more conservative, fewer prospective buyers will have thief applications approved.

However, I do envisage that there will be a new boom for council and housing to cope with the ever-minimal supply

Darren, Rochester, Kent,

It is very simple, we are a small overcrowded country and house and land prices will always increase. The so called falls in value are fiction, only the desperate are selling and only speculators and bargain hunters buying, not a representative sample.

Graham, Driffield, UK

Legislation must be introduced by the Govt to prevent the 'haves' from buying up multiple properties and BTL mortgages must be outlawed. The Govt and the 'haves' seem desperate to get the housing market back to how it was. This is nonsense, as the same old boom & bust problems will always occur.

Nick Andrew, Bristol, England

I assume all the people who delight in saying the market will fall 40% or more have paid off their mortgages already and have savings in the bank.

For the rest of us the logic that short supply may at least stabilise prices in a couple of years is a welcome thought.

Mike, London, UK

All financially sensible people would want to sell and rent at a time when their highly geared purchased houses are falling in value. In fact rents are not rising much if at all.

The UK ''shortage'' of houses is a myth. Look in Estate Agent's windows.

M Reid, Northampton,

This "finite" supply is nonsense. According to the empty homes agency there are currenlty 850,000 empty properties across the U.K!

A., Banstead, UK

Wonderful to know that another house price boom is just around the corner. And no doubt the pound will rise until it's worth five dollars and the annual GDP growth rate will hit 10 percent. And nightingales will sing in Berkeley Square.

John, Trieste, Italy

Homeowners can only build up equity/pay off their mortgages if they have jobs! Unemployment is also a contributory factor, and jobless figures are set to soar in the very areas where this writer predicts a recovery. Plus there's the stratospheric level of outstanding non-mortgage personal debt.

Philippa, London,

Having read this I'm going to leverage up and buy - I thought prices were going to fall further but her arguements convince me I'd be a fool not to buy now. Why would she have a vested interest just because she's an agent? She clearly has special insights... is there recourse if she's wrong?....

Emily Morris, London ,

Essentially thought Yolande is completely right. There will be another boom in the housing market followed by another bust. Its just a matter of when and how much.

John, London, UK

Well it's a nice thought Yolanda, nobody likes agents talking down prices. Many Equity holders are in retirement - and are net sellers. steady 2% fall per month and the carnage in the jos market is only just beginning. Buyers need mortgages that are afordable...I recon 55% fall peak to trough!

Aidan, Kent,

One of the lessons to be learnt from this crisis, is that never again should an economy be based on the value of domestic property.
When the market eventually stabilises, re-value and introduce a variable rate of CGT, to allow for inflation growth plus 1-2%, any rise above this tax punitively.

hwt, southampton, uk

Here in California, housing has dropped 55%. Yes, it can drop
40%; it can drop 60% and 70%. Until people have jobs and
can make the house payments, the price of housing will continue
to drop.

john, placentia, california republic

Is this the same Yolande Barnes who this time last year forecast a 6% fall to the end of 2009?
http://www.savills.co.uk/news.aspx?category=residential&id=9551&page=0

So now 6% has become 25%. I wonder what she'll be saying in November next year.

Munin, Edinburgh,

demand obviously affects house prices, however, demand has been curbed by the fact that most people can't get a mortgage. as long as money doesn't flow freely, house prices will fall because there is no demand (i.e. "able to purchase" demand). when we get the banks to lend, prices will rise again

bernie, london,

Never mind that each bit of competing "equity" entails that there is one more machine on the very same market!

Trivial detail. Remember, there is no limit to the water utility bills the UK will pay. After all a man dying of thirst in a desert once payed 99% OF HIS INCOME on water.

Andrew Sales, Greville, Buckminstershire

Not knowing who Yolande Barnes is, whilst reading this article, I thought to myself that it must have been written by an estate agent. And sure enough, it has been written by an estate agent! Enough of this nonsense; its a question of affordability and liquidity...simple economics!

Riyad Al-Alawi, London, England

Yolande's equity argument against prices crashing 40% is simply that on average people are richer since the 1980s (more equity) so they will tend to pay more for houses.

Anyone see any flaws?

Andrew Sales, Greville, Buckminstershire

This is FUNNY! Another media "expert" who claims to be able to see the future for us all. I wonder why they choose to write newspaper articles instead of sunning themselves on their yachts thanks to their amazing foresight that us "mortals" just don't have. Could it be they're GUESSING!? Surely not!

Anthony, Westerham, England

Yet repossessions are rising...

Of course, a cynic might suggest that an employee of a property company has a vested interest in claims about the robustness of the property market...

David Richards, Witham, UK

I wonder how companies like Savills will survive in this climate.
Not for long, if they seriously believe this rubbish.
The stock market bust is as a result of overleveraging, lead by the housing markets of US/UK etc.
It will only bubble again if the creditor nations of the east allow it to.

mike, melbourne, australia

Oh God, please God, just stop it. The housing bubble has brought the UK to the brink of economic collapse and STILL we get estate agents in the media telling us that 2001-2007 prices were completely normal.

I'd listen to the Nobel Prize winning economists - Krugman, Stiglitz etc - on this, thanks.

MB, Edinburgh,

Ms Yolande Barnes, your defence of the house prices is inspired but premature. It overlooks that the prices are too high beyond reason and the point of sustainability. There is more fall is yet to come before the prices rise again. Come back in four or more years to talk about price rise, if then.

S Yogarajah, Harrow, UK

We shall see, but this rosy picture (and these estate agent forecasts have a bit of a track record of painting a rosy picture) seems to underestimate the damage that is occuring to the economy. Their 25% number is a guess pulled from the air.

Andy, London,

Perhaps you could be discussing how to stabilize the market in the long term? Here are some suggestions:

Mandatory fixed for term mortgages - no more payment shocks
Taxation of speculation - no more flipping
Proper rights for tenants - end to the B2L casino

Result: stable prices.

Joe McKay, Newcastle, uk

Yolane needs to get her story straight.

1. "Pesimists" (i.e. optimists that hope one day we will devote our resources to something more productive than interest payments to banks on land loans) have neglected to take into account the increased purchasing power of owners with high equity.

Andrew Sales, Greville, Buckminstershire

2. The UK housing crash was caused by credit restriction.

Yolande argues that higher equity (i.e. richness) levels make traditional income multiples obsolete as a target for house prices. Yet she is also arguing that credit availability (i.e. the multiples of income you can borrow) is critical!

Andrew Sales, Greville, Buckminstershire

This is on the false assumption that wages will remain high. When manufacturing collapsed, where we got replacement jobs at all they were shelf-stacking and call-centre jobs paying half the pay (half a family wage). The same will happen now with white collar jobs. House prices will have to halve.

steve moxon, sheffield,

It doesn't matter how much equity the middle aged and elderly build up if it doesn't feed into to first time buyer purchases. These can't be replaced by buy-to-lets over the long term since the affordable price of these is determined by rents extracted from those same equity poor young people.

Andrew Sales, Greville, Buckminstershire

Yolande makes a terrible analogy to the high rents paid by immigrants in nineteenth century New York. These apartments were being competed for by a large pool of POTENTIAL immigrants. Those that did not or could not afford to live in New York either left or didn't come in the first place.

Andrew Sales, Greville, Buckminstershire

The UK has plenty of accommodation. No one is on the streets because of lack of housing and there are many empty properties. So long as there are rentals in void (and there are thousands) there will be price competition and pressure to the downside.

Andrew Sales, Greville, Buckminstershire

If nothing else, it is impossible to pay 80% of income in rent in modern Britain and live sustainably due to other more or less fixed costs.

Andrew Sales, Greville, Buckminstershire