There is an old saying that says that when America sneezes the whole world catches a cold...and America's housing market most certainly has sneezed and the UK - like many things it is connected to with the US - will inevitably also sneeze along with it. Those who claim house prices will not slow or come down are not paying much due attention to the larger picture, and to put the increase in property merely down to supply and demand is not entirely correct - as house prices have increased not just in the capital or other major cities across the UK but pretty much everywhere. Also - there was a problem with demand outstretching supply as far back as the early to mid 1980's - and even during the 1990's when house prices came down - so the demand and supply factors are not the only factors at play here. There were always too many people here on the island and not just now - or is someone going to tell me that they never sat in a 2 mile traffic jam whilst they sat in their car back than.

The Maestro, London,

The tsuanami from the U.S. housing market is soon to hit Britain, Europe and much of the world. Do not fool yourselves into thinking that because the "doomsdayers" have been wrong, that they are not right about the fundamentals driving housing.

The stock market was overvalued starting from 1997, but it proceeded to double and some indices quadruple after that. All those gains were ultimately lost from 2000-2003. The doomsdayers were not wrong regarding fundamental valuation, just wrong on the timing and the irrationality of human nature.

And to those of you who think that British property can't fall because of a "shortage" of land, take a flight to Japan. I'm sure they can debunk your supposed wisdom.

Hedgefundanalyst, New York, New York

I can't belive that we have have people bemoaning the fact that houses prices are overvalued. Read the report, 9x the average persons salary.... Prices are NOT sustainable and there will be a correction , make no mistake. This should not affect people who are not out to make money. If you are buying a house to live in, you should have considered your financial status before you signed on the dotted line, if you have got caught in the house buying frenzy and ignored common sense... well sorry that is just tough luck. Not sure that prices will fall by 40%, but there will be a correction, whether it is zero growth for a few years or an actual fall. We are seeing the cycle, because some things don't ever change.... Namely people being too greedy for their own good.

Loop, Derbsyhire, UK

The crash in florida was no the back of massive developments tho. Not the same as UK

jackboy, London,

I am a REALTOR in Panama City, Florida, USA. Over a period of 18 months in 2004 and 2005 we had appreciation rates as high as 45%. This was driven by what we call "speculators" coming in and were going crazy buying properties to "flip.. "Then one day ithe buying just stopped. Now prices have reduced DRASTICALLY, there is a huge supply of properties on the market, lots of seller concessions. We are now being touted by CNN Money, etc. as the best place to buy property in America and they attribute that to the above factors and also, once the market "rights" itself and our new International Airport opens another wave of appreciation is supposedly coming. 72% by the year 2012. So, yes, a crash can indeed make a difference. By the way I have had the great opportunity to work with some of your countrymen who transferred here to the States with their jobs.
Bonnie Milstead, CRS, GRI
Panama City, Florida USA

Bonnie Milstead, CRS, GRI, Panama City, Florida, USA

The IMF analysis is worse than useless. How can they say with a straight face that properties in the UK are overvalued, while admitting their analysis did not take into account the fundamentals of the UK market including shortages of supply, boosts to prices from immigration and greater affordability due to the availability of mortgages. Surely the overpaid economists from the IMF could develop a model that does include drivers of supply and demand - and they should avoid irresponsible comments based only on the US experience, which is a market with a totally different set of fundamentals.

richard burton, Brighton, England / Sussex

Its ok saying let it crash but IF you had a property, trust me you wouldn't!!
Yes it's sad that some cannot get on the ladder but if it goes belly up, you wont get on it anyway!!!

I saved for my deposit which led me to get on the ladder, I do not come from a rich/wealthy background, I have no family with money, I did this myself, I lived with the inlaws for a few months and worked my butt off, had 4 jobs and working 70 - 80 hrs a week, and yes it accumilated a deposit, maybe people shouldn't keep expecting everything for nothing.
If you try for a 100% mortgage of course you wont get a result.

Maria, Bishops Stortford, U.K.

Bring on the crash. It is the only way to bring property prices back down to affordable levels for huge swathes of the poplution.

Stuart, Guildford,

People love to tout supply and demand but if that were true, rentals would be much much higher and they are not. My current rent is less than 50% of the interest on an interest only mortgage. The income a house can generate is a leading indication of it's true value.

Chantel, UK,

To all the BTL investors posting here, have a look at this:

http://www.moneyweek.com/file/36564/could-this-be-the-ruin-of-the-buy-to-letters.html

George, Brighton, UK

the last paragraph says it all really. sounds like the IMF is run by estate agents "well, yes, your house is probably worth a million pounds if it was in knightsbridge, rather than bognor, and was in better condition"

hmmmm

simon mawdsley, london,

All of you who are thinking that the house crash is on the cards. GET REAL! STOP DREAMING! Have you already forgotten 4 years ago exactly the same prognosis even backed by some possessed Phd thesis expecting a crash within months.

Those of you that are hoping for the crash to buy yourself an affordable house...well keep on dreaming and waiting.

Martin, Manchester,

I live in a terrace. Its valued at £155,000
It's no way worth that amount. I'd say realisticly it's worth £98,000
A correction is indeed needed.

Phill Barlow, The Wirral, England

Oh dear, yet more experts who will end up with egg on their Corporate faces. The worst that will happen is that a few agents will go out of business, and how is that a loss to the World?

rob ashton, hampton in arden, warwickshire

Why is the term 'pyramid scheme' never applied to the housing market? It seems to be the best fitting analogy available. As soon as the last of the unfortunate people buying at today's prices have come forward, the momentum will stop.
I feel that the whole 'demand argument' simply does not apply, it is a question of overvalued assets whose value will only be truly tested when the majority first time buyers are priced out of the market. We are surely not far away from this now. Like all pyramid schemes it will hurt all of those who jumped on too late.

Richard, LONDON, UK

Macca perhaps, house prices perhaps not. Three years ago the IMF declared that UK house prices were 15-20% too high. Since then, the market is up 25%.

www.imf.org/external/np/tr/2004/tr040922.htm

Richard, London, England

We need to think of the future. If we are to be a property owning democracy, we need to build many more houses and bring prices down so that everyone can afford one. We need to change our mindset and remember that homes are where famlies live, values and dreams develop and children are brought up, not vehicles for 'easy money'. The Conservatives would be well advised to bring in a policy of home building so that Thacher's dream becomes reality. Forget about Blue-Rinse Middle-England, Tory governments are only formed when they have policies that appeal to the backbone of Britain, the working class.

Gordon Callan, Carnwath, Scotland

The IMF report seems to be only factoring in the various downsides, by their own admission, and so only giving half the story.

So if the "shortages of supply, boosts to prices from immigration" are taken into account, what does that mean?

I still imagine troubles could be ahead, but before producing an alarmst headline grabber like this, surely both the downs and ups needs sensibly weighed up?

Colin, Edinburgh,

If prices crash you get an economic down turn. That leads to job losses - so all those "waiting for a crash to buy" might just find themselves unemployed and unable to buy. Be careful what you wish for - you might just get it!

Simon, London,

The problem with the housing market that seldom gets mentioned, is that it has left us with the situation of far too many people commuting vaste distances daily.This can't be right , not only for them as individuals,but also given all the concerns about climate change.Yet the problem is who can afford to live and work in any of our large towns and cities ? Just think of the advantages of being only a 10 minute walk from work.So bring on a large correction in prices as it could help save the planet.

Mike, Dunstable, England

House prices (i.e. New build prices) are based on the price of land and the cost of the material and labour to build them. Factor in a 20% profit to the House Builder and the question is how can houses be 50% overvalued.

Yes prices will have to drop marginally or level off but a crash is unlikely as the demand for houses in Britain is strong. Unlike America and Spain etc we are not building more houses than we need. We have been building to few for to long, supply and demand people!!

Stuart Cullen, Glasgow, Scotland

Luke from Perth. What you have actually just described are the Australian and Spanish housing markets. Not the UK housing market. You should check you facts before posting.

Paul, London, UK

hmmm "imf model doesnt take into account factors such as shortage of supply" - was it someones gcse project? increasing demographic demand vs. limited geographical supply. duh. hope it does collapse 40% - boe will be forced to cut rates to 1% and i can lever up and buy more.

marco, london,

Remember the early 1990's ?? Negative equity came about for first time buyers as a result of price correction / reduction. Well it's going to happen again, the worrying thing is the average earnings / house price ratio is worse now than it was in 1991 but then the interest rate is lower

Tony, Wandsworth, London

House prices never have and never will crash in the UK because of our obsession with owning property . Anybody who thinks they will is living in a dream world. Somethimes they will stay static for a few years and then they rise again.

These so-called experts have been confidintly predicting a crash since 2003.

Roger Tilbury, Worthing, England

I'm with you Anna. My partner and I have been watching house prices in our area begin to fall recently. Asking prices are dropping and even then many houses aren't selling. The only thing we feel about it is relief. One day the prices might even come within our reach...

CS, South Cambridgeshire, UK

House prices rocketed because of easy credit for buyers. Mortgage lenders simply sold on the mortgage and re-lent the money again. Nothing wrong with that, except that when things go bad and borrowers cannot repay, the original lender may well be fully liable to the bank that they sold the mortgage to. (This is the bais of the sub-prime problem in USA).

This means that the original lender has to get his money back from the borrower very quickly in order to cover his position with the bank to which that he sold the mortgage.

Result: sudden acceleration in repossessions, few buyers, worsening credit squeeze, dramatic falls in property values. This will happen very fast. Look for a 50% fall in house values - but that's only back to where we were a few years ago.....

Richard, Saltash,

Im amazed that people are awaiting the house price crash with glee. Britain's economy has remained one of the strongest in the world over the last few years; buoyed up against the issues that have affected other nations by our strong housing market. You must also remember that Britain has a higher rate of home ownership than almost any other economy.

These two facts mean that a drastic fall in house prices will have a devastating effect on our economy, with wide spread implications for jobs, public spending, interest rates...

Those desparate for a crash are short sighted and selfish

mark, bristol,

The argument about immigration lack of supply seems ridiculous to me. If that were the case then rental yields would be rising rather than collapsing as (a) poor immigrants can't afford to buy a house (b) there would be a shortage of properties to rent as well as to buy.

Instead, we have seen excess demand for housing due to the belief that equities are not a safe place to invest money after the dot.com crash. Increased buy-to-let demand has therefore squeezed out first time buyers.

The answer as to whether the Bank of England would cut rates to bail out house prices depends on other factors. In the late 1990s the pound was very strong and emerging market economies and commodity prices were weak so there was limited global inflation. If emerging markets remain buoyant, the Bank will have to deflate the housing bubble to offset rising commodity prices and keep overall inflation close to target.

James Carrick, London,

Anna, Gerald - your bitterness is the reason you are not doing as well as the rest of us.

anne, edinburgh - best place to live,

Some people are so thick. If the houseing market collapses it affects the whole economy. Who will THAT benefit?

For those that bleat that they can't afford a house... so what!! I can't afford a car but does that mean I should be able to demand from the government that THEY force an affordable car onto the market? Then what? I'd like a plasma TV so obviously the government should force an affordable to be made. Get real. It's price and demand, that is what a free economy is all about. What the governmnet should be doing is preventing the irreversable concreteing over of so much of our green spaces.

What a house? Then earn more, save more, drink less, smoke less, spend less.

L (saved to buy our house), Crawley, UK

All those people waiting for a crash are misguided, look around you, everyone has a job, people are driving nice cars, employment at its lowest and importantly every man and his dog wants to buy property. The country is obessed, whether it is a BTL investor, First Time Buyers, Holiday home, imigrants etc etc is known as demand.......therefore prices will remain static and not fall as there is plenty of demand to fill any price fall.

Even if prices do fall max 5% which homeowner can easily absorb as they made massive gains for years. Think about it.

Also one more thing I have been there also try to get on the property ladder so I appreciate what FTBuyers are hoping for, I learnt my lesson, buy a place and enjoy your visits to the DIY centre.

Chotalot Patel, London, UK

Bring it on!

I might loose some money if I sold my flat, but my way of looking at it is I'll still be able to buy a house out in the countryside at a more realistic price than they are at the moment.

Luke, London, UK

I agree with Chris. I don't think IMF has all the answers, otherwise they would be managing the whole world's economy! With an efficient capital markets, they are actually becoming more irrelevant!

The macro-economics i.e. low interest rates, low inflation, optimum employment, immigration, demand/supply of housing, etc. are the reasons that decide the prices of houses. UK house prices is growing is because it is probably one of the most competitive economies in Europe. People flock to Britain to make a living and this benefits UK as well. One of the other factors is that people do more buy-to-lets as they have lost faith in pensions. This government has proved to be unreliable and would raid anything it can lay its hands on!

Let's run the scenario logically - house prices crash, Bank of England intervenes and lowers interest rates, cheap credit, first time buyers fuel the market again...what is the basis for IMF's conclusion -- am I missing something?

Sanjay, London,

Why should the bank of England cut rates to keep house prices high? This makes me really annoyed - myself, my partner and (I am sure!) hundreds of thousands of other peope are praying for a crash so we can afford somewhere modest to live that won't swallow up all our income for the next quarter of a century.

Anna, Birmingham, UK

I, like many ,are sitting on the sidelines waiting for the big crash, which is bound to come,so that I/we can buy myself/ourselves a cheap house. Hurray let's party! (It'll be nice to see all those idiots who borrowed thousands on their houses , to sell all they have to pay off the massive debt they owe to the banks and credit card companies-will they never learn!)

Gerald Jones, Norwich, UK

Mayfair,Marylebone,Covent Garden,Soho ,Holborn Chelsea,Knightsbridge are all areas that seem to be insulated against any downturn because of the demand from high net worth individuals from all over the World and the other factor Britain is a tax haven.

dominic, london,

Eric,

You wouldn't bring the banks to their knees, as they've sold on your debt to places like your pension fund.

Jon, London, London

How long before we have some mass panic?

Now Prime Minister (Crash Gordon) Brown Unelect bottled it and has to face the polls some time in the next 3 years he will be very worried.

Perhaps he should have scuttled to the polls, lost and then blamed the Tories for this mess (oh sorry, I mean economic 'miracle').

Pete Balchin, Solicitor , Bristol, UK

Of course there is another way of looking at it. The level of debt is now so great that the public in effect own the banks. The banks getting tougher over lending. Perhaps the public need to be a bit tougher over repaying. What precisely would the banks do in the event of major default - by which I mean millions of people becoming unable or unwilling to keep up payments. Northern Rock collapsed with borrowers co-operating. The major banks could be brought to their knees within a week by mass non-payment. Perhaps they might consider being a bit more polite to us. The old saying, If you owe the bank ten pounds and can't pay it back you're in trouble, but if you owe ten thousand the bank's in trouble' turned out to be true after all. We owe them trillions but only have assets of billions. I would say that the imbalance puts us in charge - they can't repossess millions of homes or take millions of us to court. The banks are in much bigger trouble than we are. Is anyone weeping for them?

eric campbell, harrogate, uk

The US and British housing markets are a bubble waiting to burst.no other time in documented history has seen house prices grow so rapidly,if the current trend continued only 5% of the population would be able to afford a house in 100 years.Take the advice o PAUL FROM CORNWELL,or sell your house and move to spain for a fews years and come back and buy your old house for half the price you sold it at. for too long people who dont deserve to be given a mortgage have had money thrown at them, prepare to pay the consequences.

luke, perth, australia

again the IMF is reporting whilst disregarding a first principle of supply-demand. China and India who refused to follow the IMF proposals in the SE market crash in 1998 is now much better off than those countries who did ie Argentina, Russia, etc who all ended up in entire meltdowns.

Chris, didcot, uk

yes definately overvalued by i would say about 40% at the hight of the crash possibly an overlap to 50%. in the long run high house prices are not good for the economy possibly taking housing off the cpi allowed housing to get to lunatic prices.

mr m. morgan , labrador, queensland australia

Anyone buying a house is a fool, unless you are selling at the same time. House prices are about to half in the enxt couple of years so don't take out a mortgage of more than 50% of the house value, otherwise you will be wiped out.

Paul Sousek, Jacobstow, Cornwall, UK