The house prices are determined like any other product by Demand & Supply.
Make no mistakes; in this case de supply refers, not to the number of properties in the market, but to the amount of money available in the market (mortgages). If mortgages go down, prices will go down.
The million dollars question is; are mortgages going up or down!

Ishai, Peebles, UK

If prices dropped it would encorage investors to buy again creating more competotion and price rises. It is a no win situation for residential home owners only for property investors. Home owners will suffer losses in equity while investor buy-to-let landlords pick up the pieces and buy cheaper property that will rent at the same level as before.

Seb, Oxford, UK

The crash is inevitable. Clearly the ''boom'' was created by the lowering of interest rates and the advancement of 100% bonds and here in South Africa even 110% ;even blacklisted individuals in respected of poor credit ratings were advanced multiple bonds.The only gains in the fiasco were by estate agents and individuals who sold at the right time and got out.Yes , the pyramid analogy for the housing bubble bust is the correct............Individuals who scoff at the imminent bust are shortsighted and in denial........Brace yourself guys

DAVID, KENSINGTON,

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.