In the short term, various measures are needed to stabilise the UK housing market.

The most important criteria is regaining a sense of normalcy to mortgage markets. Due to credit crunch and fall in confidence, banks and mortgage lenders are becoming unwilling to lend mortgages unless backed by large deposits. It means that many would be homeowners simply can’t get a mortgage.

A few months ago the Bank of England offered to inject £50billion to secure mortgage collateral. However, it appears this has failed to help. It may be necessary for the Bank of England to secure mortgages for first time buyers - a sector of the market particularly hard hit by the move.

It is the lack of mortgage finance that is proving the biggest downward factor on house prices. There is a danger than paralysis in the mortgage sector could cause house prices to undershoot creating more instability in the housing market.

The other problem is declining living standards and the prospect of recession, there is less that the government can do about that.