I think it depends on how long the BOE will keep interest rates low - or keep cutting them to slow the property market fall.

A good indication is to watch the Property developer stocks as they ALWAYS recover first .... usually several months prior to the housing market bottoming out. It is the best indicator of WHEN to buy also.

Take notes property secrets!

You should have a hit list of investments ready for this senario!

Hats off to you Richard. Has Bernanke been on the phone to you for your advice?

What an unbelievably gloomy lot you are!

Where on earth does this talk of 25% to 40% house price falls come from?
As Robin has pointed out in his Max Growth blog even in the USA which is said to be in 'meltdown' overall price falls are 8% with the worst hit county in Florida only down 18%.

I have the official UK house price statistics for the last 30 years which show only two years with an overall UK price fall 1982 -2.2% and 1992 -2.6% Regionally there were variations but excluding Northern Ireland which had problems of its own the highest regional fall has been 12.5% between 1990 and 1993.

So lets keep this in perspective, if you have to sell today you have a problem, equally with mortgages if you are contractually committed to purchase and still need to get funding it will be tough but outside those immediate crisis points I absolutely believe that UK property will continue to provide the long term growth that it always has.

As for selling your house hoping to buy back cheaper I would be very interested to hear of anyone who has succesfully done this on a like for like basis and made a profit after all transaction costs, stamp duty, mortgage fees etc.

Good point Simon

It is interesting that the relatively low level of main stream media interest in the Halifax figure suggests to me that this isn't going to get worse!

I'm sticking by my 2.5 to 5% fall in UK prices in 2008.

This is not a crash by any means.

Of course, inflation adjusted it is a rotten return - but it just means you should either hold (and not buy UK property) or you have to hold for the long (10 yr+) term if you are buying now (I don't really recommend this in anything but the most exceptional circumstances).

Cheers
Neil

Absolutely right chaps. And it has to be put in perspective against recent rises (100% in 5 years), which is the reason most people are not overly bothered by decreases up to say 10%.
Huw

Hope you're right here.

I wasn't aware the falls in the US were as low as you suggest. This starts to give me a little more confidence.

Richard - Any comments??

Neil,

You clearly didnt take a look at todays papers - EVERY single paper worth talking about has the property falls plastered all over the front pages.

Come on folks - we are talking about the daily press here in the age of the internet, you have to give them a few days to get the best news right.

As for why property will fall as far as 25% (+).

The obvious answer, - because over the last 30 yrs that has been the trend, for prices to increase at the rate of inflation. Think of the rate of inflation as a gently sloping line upward, now think of a cyclic wave going through the the line .... that folks is the property cycle ...... booms and crashes followed by recessions then property price recovery.

My point is that property will only ever increase at the rate of inflation in the long term. A boom (property bubble) WILL ALWAYS be followed by correction back to the level of inflation. Since the last housing downturn we have had the biggest boom ever and now we must have a major correction - back to the level of inflation.

We are talking balance and a return to mortgage multiples of 3 and half times max.

That in itself is sufficent to cause a 25% fall since incomes are insufficent to sustain house prices any higher.

The other , possible more important thing though Richard is the reigning in of borrowing caused by the credit crunch. Excessive and carefree lending was probably the biggest cause of the current UK boom despite lack of buiding, immigration and BTL mortgages from about 1996 onwards. The lack of funding will seriously cause a big fall in house prices especially at the lower end of the market , and even a 40% drop will not leave house prices especially cheap by historical standards

People just have no concept of time ....... they expect property crashes to happen overnight.

Only 8% fall in america ....... so far - although I think it is far more ... lets just say your figures are right.

8% SO FAR .......... we are talking another 6 months of month on month falls in the USA.

We are 12 - 18 months BEHIND the US property crash.

People will continue to call this a property price correction ...... until we look back on it 5 yrs from now when the prices have regained what they were in 2006 ...... then people will call it the crash of 2007 / 2008 ...... and for us it will continue on into 2009.

Keep your focus on USA and Central Europe Property secrets, because the UK is a waste of your time, because there will be no capital appreciation for at least another year or so.

Values in real terms - not just in terms of the UK PLC. The value of the £ is being erroded away - the only way to get out of the UK public Debt is to erode it away with inflation, the housing market is just the excuse to lower interest rates and allow inflation to take over for a set period of time. In total the value of the £ will fall towards 25% so we have some ways to go yet - last time I looked it had fallen 12% so far.

We are in exciting times right now, - economic manipulation to the nth degree. We are witnessing the reset of the global economy back to a comfortable balance.

By the time this is all over it wouldnt surprise me if our house prices will be just above average when compared to the rest of the G8 countries.

I can go on and on ...... I look at the big picture and to me it is so obvious. You can't look at the UK property prices in isolation any more.

We would be better to look at the ongoing property crash in terms of Euros.

Richard you DO go on and on.....and on. Charles, whether you're right depends how long the current restrictions last. No doubt lending had got out of control and money was too easy and this will probably turn out to be a much needed wake up call. But I would be very surprised if in a year's time things were back close to normality.

By that I mean sensible lending to people and businesses who can afford it at sensible margins above LIBOR. So if house prices fall 10% in the meantime, that's no big deal and it's certainly not a crash.

One area where I do agree with Richard is that this government (primarily Gordon himself) has squandered the money made in the good times on bloated, highly inefficient public services and we are certainly very badly placed for a major slowdown. Between a rock and a hard place in fact. Some people are definitely going to suffer. But I still don't see a major recession.
Huw