Dominic, Manchester: "People will not sell for less than they paid, expect no such thing without forced sales".
The young couple who paid £350,000 in 2007 for a 3-bed semi might not want to sell for less, but the retired person who lives next door and bought in 1970 for £5000 sells for £250,000 in 2008.
No sign of a forced-sale in sight; still no crash?

Trevor S, Romsey,

Is it a coincidence that house prices are about to crash horribly with record repossessions on the horizon, and Gordon is considering a snap election ?

Guess he's noted the Tories were ousted in 97 at the bottom of the last crash.

Julian, London, UK

To Dominin, Manchester,

you are right, but I have recently sold 3 btl flats in Reading, and I accepted 10% price reductions on the asking price...
why?
I bought these flats in 2000 and I made already 180% on top of the purchase price. So I could sell for 10% less without hurting my profit. And like me many many property owners.
Who cares about those who purchased this summer! Better to sell now that the market is still so high
Remember the lesson of the dot com bubble. Those who made a mint were people who got out in 2000 (I was one of those!)

Richard, Maidenhead,

On Matt Myers' post, the housing market is in a classic bidding situation. Prices go up to the maximum that buyers can afford, and are therefore largely determined by the availability of credit.

For bidding to happen there must be more demand than supply, it must be difficult to increase supply, and buyers must have no realistic alternative other than to remain in the market. These all apply and will continue to apply for the near future.

The incidentally is why Mr Cameron's plan to reduce stamp duty is misconceived. It will not make it easier for first time buyers to get on the ladder, though it will necessitate tax increases elsewhere.

Malcolm McLean, Bradford, UK

A house price crash could happen faster than Superman. There are now so many people expecting prices to come down, but the sellers are not reducing their prices. As long as the sellers do not have to sell and can afford the mortgages, then this will continue.

BUT once a few sellers are dropping prices by 10% or so, then the "houses of cards" will tumble.

I cannot see any reason to drop interest rates. The economy is chugging along and all the problems we are having now is the result of a prolonged period of historically low interest rates. I would love to see interest rates up at 7%, around the historical average. You can download the rates from the Bank of England's website.

Dick Penlothe, Stevenage,

"Is house price inflation driven by supply and demand???
Or by the availability of affordable credit???? "

Affordable credit is part of demand.

"Expect house prices to fall substantially over the next 2-3 years "

People will not sell for less than they paid, expect no such thing without forced sales

Dominic, Manchester, UK

I have also pulled out of a deal at the last minute in Finchley (Greater London). The price was too high and I realized there was no one else bidding. After I pulled out the seller and the owner came down in price by 20k. On an asking price of 350k that is a lot. But I decided not to buy anyway. Now I feel that if I wait the end of the year I will find better priced deals, and what do I risk? Nothing. Statistics show that prices are not growing anyway.

Joe, Hendon,

london doesnt seem to be too affected by this yet where rents are increasing to unbelievable levels - except that agents have said to me that now is the time to make cheeky offers.
Question is how many owners are put under pressure by re-mortgaging requirements. The large build up of equity that so many have enjoyed might qualify them a good credit rating and inexpensive re-mortgage.
You don't need everyone to go belly up to cause a crash, it only has to happen on the edges, question is how many of the near 1 million sub-primes will default over the next 12-24 months and how many does it take to rock the market.
If the BoE reduces interest rates, do we get a run on the pound as is happening with the dollar.

DK, London, UK

The financial community have pulled off a masterstroke - creating an atmosphere of fear to substantiate higher mortgage borrowing costs whilst actual rates will be reducing? Why should UK consumers have to put up with this rip off service particularly when this problem emanated from the US and supposedly dodgy debt was bought up by foolish European bankers. Are we forgetting that bricks and mortar are the underlying assets of this distressed debt which suddenly appears so cheap?

Michael, Lincoln,

I was about to complete on my first house purchase, but pulled out at the last minute because my gut told me I was paying too much and that the mortgage repayments would cripple me if they went up. Guess I made the right call although I felt as guilty as hell because the estate agent told me I had broken a chain and messed up a lot of people's plans.

margaret, Enfield,

As alluded by other posters be prepared for the shock to find out we actually have plenty of houses in this country go round and as with the rest of the world our market has been driven by cheap and available credit and massive speculation. Many banks have changed there lending practices where they make their money on the administration of the debt and because they can securitised the debt into our pension funs the have been far from choosy who they lend. Give a fool lots of money and they will find a way to spend it, hence ridiculous house prices. The banks with more traditional lending practices have had to compete with the new securitisation sausage machines, this has now come to an end so they will start charging more and the market will adjust to more sensible levels of lending.

Interesting times ahead and Gordon Brown know it!

Mark, Warwickshire,

“fundamental shift” in the UK mortgage market"
For anybody who doesn't know how this will affect them, it will mean the end of the mirage of wealth caused by a ridiculous house price bubble. And who is to blame? Well he's just about to apply for a new mandate! He's not stupid you know.

Tim Walton, Leeds, England

It is too easy isn't it? Once again the money men have looked at a sector that cannot pay for quick profits. 20 years ago it was South American governments, now it is people with bad credit ratings (sorry: sub prime lending). Surprise, surprise, the sector defaults. No problem though, we just get the man in the street to pay for our mistakes over the life of their mortgages.
Geoff. Huddersfield, UK

Geoff. Stainton, Huddersfield, UK

So the big question is????

Is house price inflation driven by supply and demand???

Or by the availability of affordable credit????

The more savvy people know what the answer has been all along.

Expect house prices to fall substantially over the next 2-3 years

Back into the realms of affordability......and ....reality

About time too

Matt Myers, Redhill, Uk