The problem is both of these areas are always “hyped” either positively or negatively, which is why we never seem to be able keep steady growth, only boom or bust. Effectively it works like this, enough people say a house is worth £250K and sure enough that will be what it is worth, and all the while interest rates were dropping, the house prices went up because people could afford a bigger mortgage… Lenders and agents had a keen interest in keeping the prices rising and of course encouraging buy to let was keeping new business flowing into the market.

The problem is of course, there is suddenly a lack of money to lend, the economy in general is on a “slow down” and confidence is low. There is not a glut of houses on the market, supply is not outstripping demand, in fact apart from people waking up and realising they have been living beyond their means for the last 5 years, nothing has actually changed.

I think the market will go the way of the hype. If enough banks cut their mortgage products, keep interest rates as they are even when the bank of england drop and become far more picky about who they lend to, then there has to be a drop but rest assured, somebody somewhere will come up with a new way of buying, lending or other mechanism and when they do, we’ll be rolling through the same ludicrous pattern we have done before.

In britain we buy houses like a business and not just because we love them and it seems everybody wants to be a property developer. The one’s who got in late and quite frankly had no right to be there in the first place will dump like crazy, causing a quick drop in the “bog standard, over priced” houses but it will be short and sharp. Good quality houses in good areas, with good decor, good space and close to good facilities will hold better.

So if you live in a terraced house, with a tiny back garden, poor parking in your street and not much else going on, your over priced £180K house, could struggle to hit £160k…. simply because it wasn’t ever worth that anyway…

location, location, location…. now where have we heard that before ?