There is a silver lining. Each generation needs to experience a little economic fear so that they learn to conduct their financial affairs seriously. Also, a new generation of home buyers will now have a chance at bat. If this correction had not taken place, an entire generation would have been blocked from getting a starter home.

A correction to the overheated, inflationary housing market is long overdue. That prices have been allowed to rocket for so long is due to the irresponsible policies of both the regulatory bodies and the lenders. The credit crunch is a direct result of their greed and refusal to acknowledge that what goes up eventually comes down.

These neo-liberal, poorly regulated policies of the US and Britain are unravelling before our eyes. Other developed nations, especially in Europe, have been criticised in the past for their more cautious policies. But now they are going to have the last laugh.

So-called "free", loosely regulated markets don't work. The people who will suffer the worst consequences, sadly, are going to be those who least deserve it.

Government must get a grip. The policies of the last 25/30 years have passed their sell-by date.

I'm happy for the price of houses to go down just as I'm also happy for the price of other items that I have to buy, such as food, cars, fuel, etc to go down. I can't can't see what the difference is - and maybe it is time we learned in the UK that houses are for living in, not for investing in. And if a few Developers and Real Estate people are poorer for it then I'm also happy with that!

The fact that the housing market has slumped, is not going to benefit the people who have owned a house for the past fifteen or twenty years, let alone the poor sods who have entered the market in the last five years. We have to keep on paying our mortgages, along with increased fuel and utility bills. I welcome the fact that young people will be able to afford a house, but what about the millions more who will find themselves financially bankrupt with negative equity?
As David Rolfe has pointed out, economic systems, where there is little or no regulation, and which only seek to boost a country's economy, by inflating wealth creation figures, will only succeed in hurting the poorest in society.

I'm still trying to pick the 'news' out of this story. Editor: what's your point ?.

I had this estate agent yesterday telling me about a house that had recently sold - after 48 viewings and 15 offers, he confidently informed me - for £50k more than the asking price. 'Wow' I said. And 'Really? That's amazing.' Of course, I believed him implicitly. The above article must be wrong.......

Prices going down? really! and the alternative? that properties already overpriced by 200 % should go on up and up and up! a million pounds for a terrace house. Estate agent and the buy to let (or hold) brigade are (perhaps) reaping the consequences of their collective greed,though many have amassed a fortune at the expense of (would have been) first time buyers.
free market? democracy? forget it - as ever - those who have, amass more, while our politicians soak up public money via dubious priveleges denied to the majority.

Re:Mike James and gas price etc.

Mike- agree with you entirely.
This is greed,and rapacity,over commodities that are a basic human need.There was an article somewhere recently about what the suppliers would be up to this summer-ie something about hoarding contracts for gas
It appeared to go unnoticed,but my prediction is large increases deliberately put through,when gas usage is at its lowest,and attracts the least amount of attention.
Come the winter everyone is going to be screaming about this,just as the delayed reaction to McBroons ten pence dabacle.
I say gas,electricity,water,housing are essentials-and should not be included in the despicable money making circus.
But do you think the likes of Brown, or Cameron would possibly upset their industry mates???

The unregulated economy has had it's moment,the capitalist bonanza has devastated the UK economy.This is what happens when you let the greediest twat in the classroom alone in the sweetshop.
Inflation is now beginning to cripple the UK,and there seems no end to it.
The political element in this country have been utterly beguiled by the business elemement,but the consequences are that the majority of UK folk will suffer whilst the politicians are well payed and retire to their mansion in the country.
Jim

A correction for the overvalued Uk property market is long overdue, it is only fair that the working class also have a chance to have their home, not just for the rich's 2nd homes & developers !
But the unethical & greedy estate agents still wants to keep the price up !

As far as the private housing market is concerned this is Armageddon. The obvious fact is that speculative housing can not survive without customers having access to mortgages. The first quarter drop in housing starts of 40% will I believe be dwarfed by the by the second quarter, as many firms have only started to severely cut back in April. I have never witnessed in 30 years, highly skilled tradesman unable to find any work at any price, this is now upon us. No doubt management and technical ranks are queuing in the aisles, which will lead to over supply implications for all sections of the industry. If this government is slightly serious about its housing targets they must act now to support a scheme to give preference to mortgages for new homes, or their will be no industry left by Christmas. (Bsc(Hons) Residential Development)

By a strange coincidence I bought my house exactly 30 years ago for £29,500, which seemed a lot at the time. Mike James's assumption that only the British and Russians put so much of their income into housing is mistaken. He should take a look at the property market in the Republic of Ireland some day (yes, it's also on the slide). French friends of mine grumbled that despite high salaries, they could not afford to buy a flat in Paris, so bought an old house in la France profonde, which they used at weekends and rented a very unsatisfactory flat in Paris. Their decision to rent was not a matter of choice. And quite a bit of their joint income went on rent and mortgage repayments.

This story is typical of the misinformation currently being touted by The Indpendent and other newspapers. One set of stats does not equate to the housing market being at its worse for thirty years as your misleading headline implies.

Instead we are seeing a perfect example of market self-regulation which will in the short term mean lower prices for houses in some parts of the UK, if not all. The correction will take as long as is necessary but readers should note that the previous two "crashes" in the 1970s and the 1990s (and there is curiously a 20 year cycle by chance) occurred against worse economic conditions than we have at the moment. Even then the actual periods of price decline were between 3 and 4 years. Then we experinced 15 years of rising prices after each "crash".

Finally, this correction is in large part being caused by an extreme lack of liquidity among lenders. This too will play itself out once the UK lenders recover from the sub-prime market and mortgage products reappear. There are signs of liquidity already returning in the US.

In other words, look beyond the headlines.

If the government wants to reach its target for new houses then perhaps it ought to enable local authorities to build new homes for the less well off, who won't be able to buy any time soon.

This would be a more productive use of our money than doling it out to the feckless banks on easy terms.

As for Cabinet briefing paper Caroline Flint exposed - what a shambles. The office junior in the average estate agent's office could prepare something better. With Cabinet operating at that level, we surely are up the creek.

sorry about that as i was meant to say from an estate agents point of view "i blame the media"thats what was meant to come out

This is a good thing, but needs to happen in a wider context-there are more lessons to be learnt than just "don't get into debt" and "don't hyper-inflate an asset". Isn't it time this country tried to make more money from high-tech manufacturing and not the "asset-stripping" exercise of City of London finance houses and big banks? sometimes it seems as if every shred of manufacturing base that was half way decent has been sold off-what's left? We are of course even more dependent upon the finance houses after this exercise (a useful by-product for them). Their patriotism follows the route of the non-dom tax affairs, the minute they see no further profits here they will be off either to another source country or their retirement home built up through years of bonuses. The country the leave behind is like a one-engine plane, and that engine is stalling now! The public will have to live within restricted means, and the whole charade of "have it now" property-porn TV shows (and other outlets for similar sentiments) will find itself with a diminishing audience for a few years! This is no bad thing! We are all having a wake-up call that has been over 20 years in the making.

Well no one can accuse them of a 'cover-up',yet,incompetence probably.
Odd case case of Minister without PORTFOLIO!
Oddly even governments who espouse the free market are unable to prejudice their electoral popularity with voting mortgage holders.

Despite recent hysteria and British fixation with realty investment more affordable housing is a pre-requisite for social mobility .
The level of the correction will be market driven and ridiculous unilateral natioalisation of debt cannot succeed within a European market.
I can send a plain wrapper if HMG cannot afford cardboard folderor dispatch boxes,French cadres know to keep their dossiers under a portmanteau.

Whenever I've watched programmes like Property Ladder, A House in the Country, Location Location Location etc, I've been increasingly horrified at the fast escalating cost of somewhere to live but even worse, the enormous risks the purchasers are taking when committing to loans many time their combined salary or using whole stacks of credit cards to do building work because they could make massive, sometimes obscene sums on the sale of each property, and so far as I could make out, untaxed. The purchasers seemed convinced that the good times would never end. We were all exhorted to buy property for investment for our pensions.

Now I'm all for enterprise but this was different. It was as though there was no tomorrow and people had no recollection of any hard times in the past due to this kind of carelessness. It was obvious that any downturn in the economy could lead to those with such enormous debts suddenly finding themselves out of work - though surely the solution is to take a leaf from Property Ladder's book and turn their own home into a moneymaking concern by renting most of it out at an inflated rent to desperate people who have been dispossessed of their own homes?

Now it seems the crunch has come and people will start to lose jobs they really need to keep with such debts on their backs. The result is hardship, and misery for their children too as homes are lost.

This is a ridiculous situation. It has happened before but never has it been as profligate as in the past 10 years. I blame Labour for much of this because firstly they should have seen the sub-prime problems coming if their advisers had been any good. How come our amazing ex-Chancellor didn't see it for himself? Where was that reportedly formidable brain hiding itself as the hedge funds problems started? Not listening to the experts who did spot it. Too busy thinking about raising taxes on the poorest in our society or sliding through some more nasty stealth taxes? I think we can see the brain wasn't formidable. If Brown couldn't see something so obvious as removing the 10p tax rate would cause serious hardship, there's no way he'd have noticed hedge funds in crisis.

I blame Gordon Brown for squandering money like water when Chancellor in just the same way as many house purchasers allowed themselves to be conned into paying far more than many of them could afford on the belief that their income would continually rise and interest rates would stay low for ever. It's not so long since Black Wednesday when interest rates leaped to 17% and mortgage repayments didn't just add £50 or £100 or so p.m. as at present but in our case tripled from what it had been. That was a real shocker.

What beats me is why people paid these gross sums for their homes. If they had simply refused and waited longer to move (OK some couldn't wait but most could have done, I suggest), prices wouldn't have risen so much. You can't expect mortgage lenders or estate agents to encourage buyers to keep their lending low - these facilitators want the biggest cut they can get for their shareholders.

I remember often hearing that the British economy is run on housing - the more people move, the more they have to buy in new furnishings, redecorate, build extensions, etc. It seems incredible that we are dependent on people moving house as often as possible to keep the country going. This is no way to run a country and it's time some more reliable system took over. But whether that's achievable when everyone sees their house as their pension remains to be seen. However, I see today the Government will not pay care bills for old people (even though care is free in Scotland, the usual unfairness of devolution that England is not so far allowed to have due to the spite of Scots Labour MPs like our unbeloved Prime Minister) so your home won't be much of a pension. Even if you can sell it, you won't get so much for it as you thought, and that money will be soon spent so you'll be on minimum social security and your children will have no inheritance.

What a mess we are in, after 11 years of Labour.

I agree with Mike, a house is a place to live. Like the Tulip craze and other speculative investments, housing is going to see a massive devaluation. What vanity has gripped the people when the likes of Thatcher started the ownership society! Concentrating on acquisition rather than producing meaningful things and relationships, we have done ourselves no favours. This summer lets just go to the pub, find our old friends, have a drink, joke about how foolish we've been and watch the setting sun, together again.

This necessary correction is inevitable but it will come as a tragedy for more than a few. The mania surrounding property in recent years has been truly lamentable. Who really profits from housing that is so unaffordably priced?-the young couple with kids on the way who are hoping to move up the ladder from a small flat to a house who find the rungs move further an further apart and out of their reach?, the young people who have feel frozen out of future property ownership for so long?, or the recent first time buyers saddled with massive mortgage debt for a (now) depreciating asset?....andsnwer: none of them! Neither are homeowners really in possession of money in the true form, that equity is just an abstract number until you sell the property and then where do you live? The only real number in the tale is the debt which is all too real!

The whole malady has been stimulated by banks initially and frankly vacuous property propaganda shows! It is truly sad that the BBC and ITV have in effect colluded in a selling-scam that will make so many impoverished, but when you read about the abuse of phone-in TV-voting lines are we to be really suprised that they would sink so low?

Brown and Blair could have done little to really influence a market commodity over which they had little control, but they have not done anything to improve matters, such as freeing up planning permission, building affordable housing, reducing stamp duty, restricting buy-to-let etc. Actually they were happy to bask in the glow of addulation when people felt a false sense of prosperity! Now Brown will suffer for the one truly cardinal sin (in the eyes of the UK population)-that he has made them feel financially worse off. That has always been unforgivable in most politicians!

The only people who have benefitted are the very rich, buy-t-let landlords who bought and sold at the right time, banks (along the way) and estage agents (whilst it lasted, though now having to deal with slim pickings). What a total travesty!

Sorry Steve but in my opinion this statement is ludicrous "Brown and Blair could have done little to really influence a market commodity over which they had little control." So a government allows what is in effect a Ponzi scheme to take place but could have done nothing about it. What about a few laws ensuring banks have enough reserves to meet any possible obligations, or regulations preventing zero down mortgages. Blair and Brown were happy to take the credit when the economy was going well but when it goes badly it's somehow not their fault!

Here at Greenwich Millennium Village the prospect of the promised 1,800 new homes has come to a shuddering stop. Last week saw the announcement by GMVL, (a partnership between property developers Countryside Properties and Taylor Wimpey) that planning permission for the next phase of 594 homes has been quashed. Coupled with 80% wiped off Taylor Wimpeys share value it a fair comment that the property sector is facing its worst period for decades.The only silver lining is that building in the public sector will sustain some developers from bankrupcy. Here two office developments to accommodate TFL HQ are still being built, a secondary school, Ravensbourne Design and media college and the further expansion of the 02. Much of the mixed tenure social housing that was planned was linked into the development of new homes, however with the developers fighting for their survival its hard to see how many of the planned 'social housing' can now be brought forward. Building the Olympics infrastructure will pose a challange in the current financial climate but at least it will provide much needed work for those in the construction industry. Luckily the cross rail contracts were exchanged and again that will sustain many in work for years to come providing much needed employment.