"...beaten only by a 3 per cent fall in September 2002 when on "Black Wednesday" John Major's Government took sterling out of Exhange Rate Mechanism"

There is nothing like a well researched article.

Ian, London,

So price inflation of 180% over ten years is good - ignore growth in the economy for the sake of he argument - is it?

This is a stupefyingly dumb leadership, bubble pumping and lala land economics worthy of a 3rd world junta who as a policy mislead the populace.

Anyway got to go to pick my bananas now.

Tom Taylor-Duxbury, Ludlow, UK

Unless you were foolish enough to ignore what has been obvious for at least the past 3-4 years that UK property market is a bubble waiting to burst, and bought within the past 1-2 years or so, you are still likely to end up better off - even if there is a 20% or so correction in prices.

Think of all the money saved in rent over the past few years, the privacy and comfort of living in your own home, & the money gained from renting out the spare bedroom.

If you are mortgaged to the hilt, and are worried about soon being in negative equity, you should sell up immediately. Once the credit crunch really hits, and the rich buy-to-let landlords decide to cash in on parts of their portfolios, the market will be flooded with properties. Once supply goes up further, prices will undoubtedly fall. Then you will be in negative equity - and properly screwed.

What fool really believes prices wont plummet when USA is just starting a recession, and people are up to their eyeballs in debt?

Chuk, London,

So tell us something we don't know?!

The only parts of the country where real estate will continue to flourish is maybe a select-few prestigious areas of London, whilst the horizon will darken for the rest of the country which is beginning to take on the appearance of one giant, urban sink-estate, with the exception of those areas still with some grass and tranquility which are ever diminishing.

You only need a modicum of sense and foresight to realise that the limitless supply of easy-borrowing in recent years- where you can even be unemployed but still apply for a mortgage and two £3,000 credit cards- would all end in tears.

Darren, Greenhithe, Kent, U.K

Sell now if you're a canny investory, and buy back in a couple of years at a 20-30% discount - that's the best bet to turn your paper profits into bankable ones!

Peter, London,

Cuts have not been passed on so this is all about rebuilding balance sheets and profits. Not to help homeowners. At the same time, they probably fudged the index because they want a cut in rates. I think there may be a well-timed rise next month.

If the market should be seen "in context" and "fundamentals are strong", why do we need a rate cut anyway. These people have no self-respect. Surely they know they sound inconsistent.

Govt helping first time buyers?…BTL should not get full tax relief on their interest payments. Add a CGT surcharge on BTL…just as banks get help because of their "special" role in the economy, BTL should be controlled as housing has a "special" role in society.

James, London

The Halifax Index for London fell by 6% quarter on quarter in the 4th quarter of 2007. Prices fell (non-seasonally adjusted/ not annualised) by 1.3% year on year in March...the first time since January 1996. If month on month prices remain flat we will end with a fall annually.

Trevor, UK,

Kevin in Glasgow, you should move to Kirkcaldy as Brown's 'fundamentals' will need all the support they can get in 2009/10!

Paul, Coventry,

These were my words in February:

"...Excellent!

So now all of us who have been working and saving properly not muntering away (wastefully spending) our cash can take control again...

Excellent Excellent Excellent.... Bring it on and the four times (proportionately) more Sub Prime mortgages that the Uk has than the US (denied by David Smith, but including me me me, I want, over leveraged Buy to Let mortgages) well.... Enough said....

Austin Tassletine, South West, UK ..."

Can you bale out the housing market now Prime Minister (Crash Gordon) Brown Unelect ? I'd like a bung myself please...

Austin Tassletine, South West, UK

Strange that there was none of this hysteria when prices were *rising* by 2.5% per month, fuelled by all too easy credit.

Paul, Coventry,

Middle aged people like me have seen their property increase over 3 times during the past 10 years; it won't hurt any of us to see a moderate correction in house prices so that the first rung on the ladder becomes more attainable to FTBs. The credit crunch and lower multiples of income will probably do this anyway whatever happens to interest rates.

john, milton keynes,

Lenders have been laughing at us for years now with a highly commecialized market on peoples own homes. They already reaped $$$ in massive mortgages and debts for some pretty modest properties. The bankers dont want to back away, and no one including the government is in a position to teach them a lesson. Dont worry, they can absorb downturns and crashes, and now with even fewer fears, they will continue to try pumping the market whether the price increases or decreases, its all a squeeze. If it crashes it should crash big - why dont we just go back to 1980's prices ? I mean thats when i was born after all and im sure my parents couldnt have anticipated i would need any more money to buy my house ?

Ridiculous. These new buyers are all wimps and will just sign their lives away over to debt. Im sure the banking community couldnt be happier and in more profit.

Here's a REAL target for the BOE can think about:
House price growth should match economic growth.
= compound 3% year - on - year.

If house price growth exceeds economic growth - there should be an adjustment to balance new mortgages and sales which are based on those mortgages offered.

Controls on lenders, also means controls on buyers who depend on the lenders to make the property purchase.

We already saw that controls on buyers doesnt work so lets throw that idea in the bin please.

David, London, UK

i pray to god that the prices will drop another 60% so the indians can buy the whole country

saud, riyadh, kingdom of saudi arabia

Why the pressure for the BoE to reduce the base rate? There was not this pressure to raise the base rate when house prices were rising. The line back then was that the Boe was to control inflation, not house prices!

Caroline, London,

I agree with the majority of comments on here. I have no sympathy that over-inflated house prices are shaving off a £1k here and another £1k there or that thousands of buy-to-let investors have lost money on property prices that have squeezed most of us first-time buyers out of the market. Bring it on!

A Heywood, London,

The U.K government should sort the housing market out once and for all. Tax 2nd home ownership heavily, bring the market back to it's proper value, i.e 100k for a 3 bed semi, and stop these ludicrous rises where stupid people believe that a rise in the valuation of their property is a good thing. It will hurt short term, but in the long run might save us from an exodus of young talent who can't afford to buy a house. If a couple both working in ANY job can't afford a house of some sort, then the market is a mess and so is the country.

Neil, Birmingham, U.K

The pundits talk about house price rises as though it is a natural phenomena - the truth is that too much money has been lent by the banks etc fuelling demand and allowing estate agents to push up the prices.

Many years ago banks, building societies, insurance companies were allowed to buy estate agencies which I considered to be a conflict of interest. A very wrong decision which surely pushed up property prices.

At one time a bank would not lend more than 3 times salary or wage based on one income. This restricted house price rises and allowed families to have a good quality of life without both husband and wife having to work all hours.

P Baker, Andover,

House prices have a long way to fall yet.

A simple calculation and you can see why.

Property of 250,000.... what income would you need to afford this?
At 4 times salary and needing a 10% deposit.

Deposit = 25,000
Salary = 56250

That is a salary of 56K+ to afford a 250,000K property.

Which currently in London would buy you a run down dirty 2 bed flat next to a main road!

It's just common sense, 250K properties are average in terms of price, a 56K salary is well above average.

Joanna, London,

The UK is in a VERY precarious position. Unlike the US and most other western countries that have seen house price inflation rocket over the last few years, UK mortgages are almost all entirely floating rate. Clearly, that is short-termism and encourages reckless lending. The only way for real stability is to have 20/25 year fixed rate mortgages as the norm - like in the US and Europe. Along with City jobs being hit, the UK economy is not looking healthy at all - how can Gordon Brown say it is??? Let's just hope the Russian tycoons don't decide to resettle in Paris...

I lived in a rented 2 bed flat in Hampstead, London and watched in disbelief as the price rose from 130,000 quid in 95/96 to as much as 750,00 - that's ABSURD. There was no "appreciation in value" - it's all merely a reflection of easy credit. And now the days of easy credit are gone. POP! Prices will be down 30%+ within 18 months. It's happened here in California and it's happening in the UK now.

UK Expat

D. Eyre, Los Angeles, California

Whinge whinge whinge. It's just an investment that goes down as well as up. So you lose your home, so what? Go out and rent. It's not as if any of you are going to be homeless, I just cannot understand this torturous whining about "losing people's homes". It's no big deal, you reaped the virtual rewards when the market went up, and now you reap the virtual downside as it plummets. Just get over yourselves and stop this fixation on home ownership!!

tom franklin, london, uk

The last property crash ocurred during a general economy crash and high interest rates. The economy is much more robust now than it was then, and it is likely that this is just a plateau for property prices, with future rises and falls being only minimal.

Stuart C, Crawley, West Sussex

Stability and Prudence two words not watched by Labour

steve tea, manchester, cheshire

Why should a decrease in house prices make such a difference that media and the public consider it a disaster. Unless you are buying or selling a house, it is completely irrelevant as to what is the paper value of your house. If you are a first time buyer, it can only be good news. If you are buying and selling and the value of your house has gone down, then it is very likely that the house you propose to buy has also gone down in price. Hence, a decrease in house prices only affects the people who are selling a house but not buying. That must be a very small percentage of the population. Those who borrow on the basis of the equity of their house, are speculating and hence they are taking a risk. So what is the problem. I am not loosing any sleep.

Vinay Mehra, Purley, Surrey

I'm a recent graduate looking to get on the housing market and see this as great news. I feel lenders have been irresponsible in lending 100% mortgages and up to 4 or 5 times your salary for the past few years. If such mortgages had never been offered the prices would be lower than present, benefitting first time buyers in the long term.

This news means short term first time buyers cannot get a mortgage but longer term, when a deposit has been saved, house prices will be much more reasonable.

Steve, Manchester, UK

The pyramid scheme that is the British property market is now unravelling and the lies and spin of all those phoney experts who have graced the pages of the mainstream media for the past few years are now being exposed like dirty linen. As they say, the truth may be bitter, but it always prevails.

anthony, london, england

What is it with these 'so called' analysts still predicting a slight increase in house prices? We all know that property is around 40% overpriced and the 'so called' assets the lenders have on their books are mainly 'sub prime' bundles which by definition must also be around 40% over priced. Do they not understand economics? There is a major correction currantly building a head of steam and I doubt lenders will soon be even offering 75% mortgages.

D Case, Newquay,

As a foreign observer at a distance of the British and US property markets, I want to end Stephen Hulton's 'conundrum': RICS was stupid beyond belief, when thinking they could talk the market up.

As for Roarke's opinion that prices in Great Britain never got to the total idiocy stage they reached in the US, I want to point out that the average price of a home in the US at the top of the market was quite a bit lower than HBOS's average standardised price of British homes... if you take in account exchange rates. I know that you can't really compare figures like that, but I personally think that residential property prices in Great Britain had and still have a lot of hot air in them…

Eddy Verhaeghe, Oostende, Belgium

If the BOE cuts rates this month, they should be sacked. They did nothing when prices were soaring, so why should they do anything now? Inflation is rising and set to continue rising. The BOE is guilty of creating this credit bubble and it will bring misery to millions. Their solution is to pump more money into the system.
A house price correction is needed and wanted. I do feel sorry for those who have bought in the last 2-3 years, they will be in negitive equity in no time.

Scott, Brighton, UK

"Provide some context! What a lot of shrieking about a 2.5% drop when there have been wild increases month on month for years! And a panic about the pound dropping slightly below $2 when it was $1.75 not that long ago. Get some perspective!"

Yes, if you want some perspective, look at how the pound has dropped against the Euro in the last few months.

No point trying to judge the pound's health by comparing it with the dollar, as the dollar is diving as well!

Mark White, London, UK

Interesting to see behind the headline that Greater London prices up yet again (para 7), and in the actual report itself, that big regional variations are as expected.

Presumably due to the fact that London v non-London are wildly different economically....

When is a crash not really a crash?

Ann, Sydney,

Bernard Ledger, Geneva, Switzerland.

Bernard, YOU WANT to move to the UK from Switzerland to RETIRE. Are the Swiss Alps sending you mad!!!....

pip, sutton, surrey

I've been investing for more than 10 years in the UK, and relatives have been investing a lot longer. We have collectively seen most periods of unease in the property market and this is a perfectly normal and expected part of the property cycle. Not only is it expected but very important.

There is a lot of negativity on this particular board, and there are many things to agree and disagree with. For one thing buy to let isn't the evil wave of capitalism stopping good folks from getting on the ladder.It still only counts for less than 20% of housing, and a large portion of that is over exposed flats in cities.

Home ownership used to be something you worked hard for, not a given right, and many of my tenants choose to rent because it suits their lifestyle.

Price falls are essential to investors as rents rise substantially in these periods (all of mine are). In 10-15 years investors will have the cash flow to withdraw equity after the next property boom whenever that will be.

Matt, Leeds, West Yorkshire

RE: Christopher Hale comments...

No. I didn't misread the article. The times have just corrected their initial error. The text was copied and pasted from the browser, so I couldn't have misread it, could I?

Anyway, time for some non-typo related comments on the house prices.

Yes. House prices are too high. Unfortunately due to the nature of bubble-economics the period of deflation will be coupled with a very uncomfortable ride for most people.

Hamilton Grayton, Newmarket,

Cliff in Leeds you are so right. The banking sector are desperately lobbying the Bank of England to get them out of a hole. Mervyn King and his committee are in the game of inflation protection. Or they should be. They need to hold firm and do their job.

Jon Dickenson, Wrexham, UK

I already own multiple properties and have many friends who are also landlords, contrary to what most people think the majority of us want prices to fall so that we can all buy further properties. Just because the value of our current properties may have dropped it doesn’t mean they are less affordable for us to maintain. The only people who will loose in this are the people who already cant afford a house,…….for those of you wishing for a crash you may want to reconsider what you pray for.

gary, Edinburgh, UK

Here it comes ........... and the crash this time is going to be bad.

Gordon Brown will be remembered as the Chancellor who stoked the credit boom, and was swept away by the credit crunch.

Donna Walker, Effingham, Surey

House prices have gone up over 100% in the last 15 years so why is this so bad. Normal folk need at least another really really big drop in prices before we can afford something.

Frederick, London, UK

I don't understand what all the fuss is about. We live in a small island with a finite supply of residential land available. The population is rising and, as Gordon Brown says, the fundamentals of the economy are strong. Bricks and mortar are where the real wealth lies and I predict prices will rise between 10% and 15% in 2009/10

Kevin Hollister, Glasgow,

This is the first positive news for those first time buyers, but is double edged because 100% mortgages have disapeared and the mortgage interest rates have not gone down with bank rates. So the probability is that house prices will continue to drift downwards as there is simply not the volume of demand because of the shortage of credit. Until banks rebuild their balance sheets there will be a continued reluctance to take any risk. They obviously believe that the house price decline has some way to go, because the best mortgage interest deals are only available to those buyers with a 25% deposit. What no one seems to have factored in is the effect of all these facts on the first time buyers themselves. Who in their right mind would buy their first house in the current market declines? In effect the banks are telling you that themselves - they have factored in a 25% possibility of negative equity in the purchase of your first home. The average home lost over £5,000 last month alo

David Nammory, Liverpool,

Many people including the author of this article mention falling house prices as a reason for the Bank of England to cut rates. But the BoE did not care about rampant house price inflation over the last 5 years and did not react by raising interes rates. Why should it cut interes rates now? Central banks do have to start thinking about how they address housing markets in their policy.

Paula, London,

'beaten only by a 3 per cent fall in September 1992 when on "Black Wednesday" John Major's Government took sterling out of the Exchange Rate Mechanism'

Nice bit of revisionism.When Britain was 'thrown out' of the ERM because the Conservative Government had reduced us to such a state of economic incompetence that we were not deemed fit to be allowed to operate in it, is how I remember it.

eric campbell, harrogate, uk

errr, James London. You do realise that the 2.5% decrease is in one month don't you? Which if maintained over a year would be a 30% decrease for the year? Well, if that was to happen I guess you could call it a crash - no?

Alex Ritchie, Salisbury, UK

Prices will drop I am sure but the house price increase has also been twinned with a big population influx, which is what makes people require more rental space.

Prices will come down but are all the people that require these rental properties going to do what exactly ? go back to where they came from ? I dont think so. There will be a fall but as long as demand is there for renting I think it will not be as dramatic as some people clearly want it to be based on some of the rather bitter comments here.

Mike, London, UK

Lets hope next month the fall is even bigger. The quicker the correction is over the better for the whole economy. Still, prices never got to the total idiocy stage that it reached in the US, bad enough but not that bad. I'd expect any sensible buy to let-er to offload any non-100% property right about....now. Interest rates are on the way UP not down.

Roarke, Wembley, Uk

House prices are actually down 1.31% since March 2007. Some incredible number-fudging here as pointed out by my namesake, Jim. Go to the report on HBOS's website and see for yourself : http://www.hbosplc.com/economy/includes/08_04_08HousePriceIndexMar2008.pdf

The standardised average price for March 2008 is £191,556. The standardised average price for March 2007 was £194,094. The difference, -£2,538, represents a decrease of 1.31% year on year.

More significantly, the highest the measure reached was £199,600 in August 2007, so prices have dropped 4.03% since the peak.

A statistician could punch a lot of holes in house price figures, not least because you're not comparing a homogenous population. However, these trends are important because they influence perception. The banks know this, so they dress up the executive summaries of their reports (which is all the journalists appear to read!) to paint the best picture possible. But the truth is in the numbers.

Jim, Enfield,

I'm afraid Mr Hamilton Grayton of Newmarket misread the paragraph, and I quote (by copy and paste)...

"beaten only by a 3 per cent fall in September 1992 when on "Black Wednesday" John Major's Government took sterling out of Exhange Rate Mechanism. "

And I agree with most of the comments here and I've been saying to friends for almost a couple of years now, that "this can't go on, it's unsustainable". Unfortunately, for my friends with mortgages, I've been proved right.

And all those people whom extended their mortgages to buy new cars and holidays etc. are smarting a bit now and serves them right for being such greedy, short-sighted idiots!

Christopher Hale, Worcester, Worcestershire

In Norbury South London 1 bedroom conversions have dropped on average by 7%. Norbury is 20 minutes from Victoria.

Jon, london,

Well, that stats are just to pressurise BoE to reduce rates. Bank might reduce base rate and then the overall Inflation figure would be above 2%. The above inflation figure of 1.1% is just for the property market.
So don't panic or get excited by the reviews provided by such businesses as they are there to make their own way out of any crises.

Mike, London, UK

James, London, UK - how much do you want to bet? Your "portfolio"? Think about the fact that with lenders ceasing to lend, where will the money come from to pay massively over inflated prices? Doh!

Davie P, London,

I have been waiting for at least seven or eight years for some sign of hope that it might be possible to return to England from abroad,buy a home,and retire. Before it was unthinkable but at last the door seems to be opening....

Bernard Ledger, Geneva, Switzerland

I'm telling the banking sector to shut up.
You got us into this mess you should feel the pain.
Any cut in interest rate will not help Joe Public one jot, what will hurt is inflation off control.
Come on BoE hold your nerve.

CLIFF, LEEDS,

To all those shouting 'Hooray! the bubble has burst' I remember the last 'crash'- the only ones losing their homes were the poorest. The repos were all in the roughest, most deprived areas. If it crashes again, there will be fewer properties on the market for first timers as banks will be withdrawing cash to borrow, and interest rates will rise- so first timers still won't be able to afford a home, and those who already own can't afford tomove up the ladder. Landlords need to recoup their cash from buying overpriced properties, so they charge more rent. Whenever there is an extreme like boom or bust, the poorest people always come off worst. The richer people always have a security blanket to fall back on. So think again if you are hoping the market will crash, you still won't be able to buy a home. A bit of a hollow victory for those who are cheering I'm afraid.

Jo, Solihull, West Midlands

20 years ago, the madness of 'House Rush' started. Now it appears to be heading for an end. In the process, instead of building more manufacturing industries, Britain built more houses with OVER VALUED price. It leads to mortgages and debt. From 1995, British are living in a FALSE ECONOMY and GROWTH, created by Gordon Brown.

From 2010, British will have to live in a REAL ECONOMY. It will be bitter and hard. Because, it is thousands of miles behind in the world economic race.

I wonder, What happened to the British spirit and hard work??

Uma Shankar, UK,

When RICS stated that house prices were going to rise by 40% in the next 5 years last July,they were either stupid beyond belief or trying to be clever by talking the market up.I havn't made my mind up which it is yet.

Stephen Hulton, eure, france

Provide some context! What a lot of shrieking about a 2.5% drop when there have been wild increases month on month for years! And a panic about the pound dropping slightly below $2 when it was $1.75 not that long ago. Get some perspective!

D Pelgarthe, Manchester, UK

This is long overdue. I have little sympathy for people who have overstretched themselves in order to buy all these ridiculous second homes and buy-to-lets. Houses are getting chopped up into smaller and smaller flats and people who manage their finances sensibly and know their limits have been priced out of the market for years now. I just hope the government doesn’t start bailing these people out at more prudent people’s expense.

That said, this all comes down to criminally irresponsible lending by banks. Heads need to roll at the big financial institutions for this mess. What do we have the FSA for?

Luke, London,

This price drop surely isn't a surprise to anyone?

Affordability has been stretched to breaking point by homeowners having to compete with speculative investors.

Isn't it about time that the inflation indices included the cost of housing. That would have given a much more realistic target for pay negotiations, etc and might have made the government think more carefully about protecting the market from speculators.

Of course, it didn't suit Brown to do so. He's ridden high on a wave of debt built up by his poor management. Well, what goes up, must come back down so maybe Gordon, your fortunes are about to follow those of the housing market (though I'm sure you made sure you will be alright)

martin, newton abbot,

"...beaten only by a 3 per cent fall in September 2002 when on "Black Wednesday" John Major's Government took sterling out of Exhange Rate Mechanism..."

D'Oh!

Might want to do a fact check on this, or at least slap the editor's wrist a bit! Looks like you've mixed up a couple of events or just got the wrong year for "Black Wednesday".

Hamilton Grayton, Newmarket,

When minimal US interest rates fail to stop the sub-prime rot over the pond, bet your bottom dollar we shall be the first to be sucked into the turbulence, regardless of the proclaimed strength of the UK economy. Negative equity is looming here due to fallacious fiscal and lending policies fuelling an artificial house rpice boom. It's payback time. It wasn't nice last time - it'll be a darn sight worse this. Mr Brown's continual reassurance that boom and bust is a thing of the past - is bust.

Mike L, Chippenham, Wilts

Halifax's chief economist Martin Ellis said: "Overall, we expect there to be a modest (low single digit) decline in UK house prices this year."

Martin, what ARE you saying!? We have already had what you are projecting in a single month! Are you seriously suggesting that's it, and on this news, the market will pick up again now?

Perhaps another Chief Economist is required at the Halifax? No wonder with such projections that the market is experiencing difficulties, and that Halifax's share price is worth HALF what it was one year ago today!

Can we take seriously for a second this company's expectation? I find it patronising that a corporate expert in this sector should lose 50% of it's share price and expect me to consider yet another biased, optimistic prediction!

With momentum like this 2.5% fall in one month, it is actually very possible that we will see a double digit fall this year. Just 2.5 more months at that rate. I for one will not be buying on Halifax advice.

Richard Sarsfield, London, England

i wish prices will go down by 50% i will be smiling all the way to the building soceity

saud, riyadh, kingdom of saudi arabia

2.5 per cent, call that a crash, dream on. Anyone fancy a flutter that house prices rise by the end of the year?

James, London, UK

Same old quotes from the same old people trying their best to save their business and huge bonus payouts.
Its a massive bubble that has just burst! nothing you can do about it, so just give us the stats and watch this market correct itself.

John Cowen, Southampton, UK

Cutting interest rates, even down to zero will make no difference. People have taken on far more debt than they can afford encouraged by commission seeking brokers and bank staff. The problem now is that the banks have no money to lend.

John, Lincoln,

It is not a 'nasty' bust.

It is a much needed start to a return one day to a normal economy and normal housing market.

Start using the correct language to explain a situation.
"A return, sensible, modest, affordable, common sense, equality"

Instead of
"Greed, speculation, over spending, unaffordable and selfish"

Clearly elevating the cost of housing to totally unaffordable levels was never going to last. Someone had to pay for it and the fact is - future generations cannot afford to.

Thankfully it will mean goodbye Gordon Brown and New Liebour as well. Can't wait.

J Schneider, Worthing, West Sussex

The BoE MUST NOT intervene in the housing market by cutting rates. It has not mandate to do so. House prices must fall to restore some sanity to the market and allow access to homes for millions of young people who simply cannot afford to own a home

Colin, London,

The banks, RICS and estate agents have always tried to inject some positive spin into the looming price crash and, although 2.5% is a massive drop and demonstrates a huge about-turn, they are still trying to talk the market up! Who are they trying to kid?

David Wood, Lostwithiel, Cornwall

The Bank of England is tasked with keeping inflation at 2% using the cpi inflation measure. It is not tasked with managing house prices - it did not manage them when they were increasing at an annual double digit rate.. Clearly their previous decisions were less than perfect since inflation has been above their target for months now without any serious attempt to bring it back to target.
Mr Archer states that there are "serious inflation risks" yet he still expects the Bank of England to reduce rates - seems risky to me!
If they do expect higher inflation,bigger home heating and electricity bills ,more expensive petrol and a weaker pound pushing up manufacturers input costs and negating any positive effects from a weaker exchange rate for a start.

James, NI, UK

I own my home and will lose money (on paper) with the falls. However, I am really glad...it is totally wrong that people cannot afford basic things such as a house. How will the next generation ever be able to afford anything? There have been too many greedy people buying up houses and making it impossible for normal people. Hope they start to suffer.

S, herts,

...are we also about to see a glut of new properties for sale as people take advantage of the tax changes over the weekend that mean that their capital appreciation on buy-to-lets are now taxed at 18% instead of 40%?

For months we have heard the Halifax tell us that house prices will continue to rise as there is a "shortage" of houses. Is it really a "shortage", or is it really a "shortage of houses for sale", which is of course slightly different. The factors that are currently at play in the housing market could swiftly see this shortage turn into a surplus as a tide of sellers either cashing in capital gains or unable to afford to remortgage are met by uninterested "buyers" who cannot afford to get a mortgage, or are not interested in buying an asset that this swiftly falling in price.

Matt, Clapham, London

A knee jerk reaction interest rate drop is very risky indeed, unftation is hovering at the point where it can easily run away, and a drop in the base rate will only be a catalyst. Lets hope the Bank of England has the sense to at least freeze it.

People have borrowed far too much, and it is they who pushed up the house prices, backed by banks who made them feel like it was safe to do so.

This country is getting into a real mess, and it could have been avoided by crankin up the interest rates three years ago (7-10% would have done it). Then we would have stable house prices, low inflation, and an incentive to save.

What we have ended up with, is desperate home owners, greedty BTL owners, high inflation (do we really believe it is 2.5%, yeah right)

Get real, your home is not your wallet, it is somewhere to keep you warm and dry.

Chris, Canterbury, Kent

the truth is nobody really knows the size of the correction - we are clearly going to witness a fall in prices but i firmly believe prices will be back to their current level in at least 3 years. the next 1/2 years therefore provide a real opportunity for savvy investors to exploit the market and pick up a comparative bargain - providing the banks are still offering decent mortgages...

Enzo, NW,

The market was artificially inflated anyway and providing 100% mortgages is madness anyway. Furthermore, the mortgage lenders will not pass on any cut in base rates to borrowers. We are far to obsessed with house prices and homoe ownership at too early an age.

Ca, Manchester, UK

Why should there be a rate cut every time houseprices go down ? There is inflation to consider as well. They didn't put the rates up when house prices were soaring. House prices NEED to fall 30-50% to get some sanity back into the market.

Sofie Nears, Oslo, Norway

This fall will stop when houses are selling for 10% of their value today, and most are owned by the World Banking Cartel........who are the ultimate investors in almost all sectors, today. If you wish to know why it is occurring, go and watch the internet film, "The Money Masters" on Google. If you are pressed for time they have a good 1500 word analysis under their FAQ's sections, "What Caused The U.S. Housing Collapse." Apparently none of the financial writers for The Times and other news outlets have ever seen the film, nor were they taught these facts in University. People with MBA's have written the site to verify this and to thank y the filmmakers as well. I certainly do.

victor compton, Cherbourg, France

"the worst figure"? - this is great news for thousands priced out of the market by the greed of second homeowners, buy-to-letters, those on 125% mortgages - all the flotsam of the boom to be washed away.

Sympathy? You ramped the market for 10 years, now it's coming back to haunt you.

James, London,

In case no one else has noticed the year on year figure is actually over -1% (March 07 average price was £194K).

They have used some trickery to come up with a yoy +ve figure.

Pathetic.

Jim, London,

The housing market is now toast, with the number of mortgages withdrawn in the last couple of weeks the figures will be far worse next month. How bigger drop will we see by the end of the year ?

Sambino, Barrow, Cumbria

This is the other side of greed.

Costas, Cyprus,

The Halifax figure should be no surprise to many in the market including estate agents who have seen falls far greater than 2.5 per cent in the last month. Anecdotal evidence from surveyors, sellers, and buyers is that the market is declining quite fast in some areas.

However, Halifax's figure should not be a reason for the MPC to cut rates this week as UK house prices are so ridiculously high that a "correction" has to come. Falling values are good for first time buyers and those wishing to trade up so we should be pleased that prices may be returning to some form of normality. A fall of 20 to 30 per cent over the next couple of years would be good for most people except the recent investors in the buy-to-let market.

Patrick Upton, Milton Keynes, UK

Houses have been overpriced for far too long. There had to be a change. The availability of cheap credit has now come to any end.....a violent correction is the only possible outcome.

michael clarke, Windsor,

About time realism kicked in. Now if prices could drop so we can afford to buy homes bigger than matchboxes that would be great.

Farrukh, Woking, UK

very very good news!

riccardo, brussels,

Oh no, Mr 'Global Insight' again begging for a rate cut! He should realise that the BoE's remit should be to protect Sterling and keep inflation low, not to maintain an asset bubble. There is no 'danger' of a housing market correction, it is happening, long overdue and welcome by most.

Paul, Coventry,

These figures don't take into account the recent serious contraction of the mortgage market; the drops have only just begun.

Tom, Zurich, Switzerland

What happened to the demand??? Reality bites, there never was any demand once you took away the 100%+ mortgages and the BTL speculation. A cut in interest rates cannot change that either because it is the LIBOR that is in trouble. The problem is these falls make even more of the collateral worthless. Every 10% fall in prices effectively takes a bigger chunk of their assets out of market against which they can borrow.

Ed, London, UK