Our lovely neighbours came round for supper last week. We were all newcomers to our Islington square at the same time four years ago, and both houses were nigh-on identical wrecks when we bought them for similar bargain prices. After which, both households spent the following year throwing money at the Polish workmen who rebuilt them.

And so, when the conversation headed down the credit-crunch route (as it tends to do) and our neighbours told us they had been negotiating a remortgage, it was naturally of vital interest. Yes, it was tough, they said. Yes, it was costly. Yes, the administration fee made them choke. We made sympathetic noises and, in a scene being played out in stripped-wooden-floor kitchens across the nation, passed the red wine. Then came the crucial question.

“How much was your house valued at for the remortgage?” I asked, casually. Because their house is the same as ours, what is theirs will be ours, price-wise. And British homeowners simply love to know how much their home is worth. We cling on to that information rather as Gollum does with his Precious. We are still clinging right now, but are worried it might be a bit less precious these days.

We knew how much our house was worth 18 months ago, because that was when we put it on the market for about three months. A nice man from Foxtons suggested we try to sell it for a figure we shall call Y. In the end, it didn’t sell, but he assured us that was what it was worth. So what, I hardly dared (but still did) ask, is its current value?

My neighbour took a deep breath, and told me the figure given by her surveyor. Let’s call it X. Was X a great deal less than Y? Dear reader, it certainly was. Silence descended on the table. We all drank some more red wine. The only way I can sum up the sentiment is that it is like believing you weigh 9st, and then finding out you are actually pushing 10.

Life wasn’t meant to be like this, you see. Back in the distant days of the previous property slump, we all began to buy properties and mortgaged them up as far as we could. That was the way to start, we learnt. Quite right. Shortly after this, the value of our houses rose and rose, until they had gone up so much that our mortgages seemed tiny by comparison. Even if we hadn’t paid off a penny of the capital.

Now, however, we have stepped backwards through the looking glass. Not only has servicing our mortgages become more expensive than ever, but the value of our houses has begun to slide, in some cases until it is little more than that of the mortgages, which have been growing at a prodigious rate as we have helped ourselves to a slice of the equity to finance new cars, holidays, school fees or deposits on buy-to-let flats. Now the City has folded up and died, negative equity might be on the way. Goodbye, red wine. Hello, Pot Noodle.

To still my beating heart, I turn to an expert. David McGibbon, director of residential sales at the Islington branch of Chesterton, is the lucky chap I ask to give me a valuation over the telephone.

“Which side of the square do you live on?” he demands, sounding rather like Lady Bracknell. I tell him. “Well,” he responds, “I would say X is a low valuation. Frankly, we sold a house just up the road from you for Z [an impossibly high figure] at the beginning of February, within 10 days.” Phew.

“You journalists always want to talk down the market,” says Fraser Turvey, head of sales at Foxtons and the man responsible for the valuation 18 months ago. “What would I value your house at now? Why, around Y [the same as before]. We sold a house nearby last week for a lot, and it was run-down and boring. And mortgage surveyors are notoriously downbeat.” Yeah, well, Geri Halliwell would doubtless come over as downbeat compared to a Foxtons estate agent. So nothing has slipped?

“Since the height of the market, when we were getting offers over the asking price, there has been a readjustment,” Turvey replies smoothly, “but there is more competition among sellers and more competition on the market.”

It’s pathetic. I’m pathetic. Valuations are hardly scientific calculations. The only way of testing the market is to sell your house. Why the need to know? Is it because we are so godless and heartless that the only stable things we believe in are celebrity and house prices?

It might be. “It’s over. It’s all over,” said a friend of mine at the theatre the other night. (As it happens, we were drinking white wine, that evening.) “The banks have done it, and we’ll be picking up the pieces with our mortgages and a housing crash, while they go off with their severance packages.”

He laughed in a hollow way and polished off the wine. “We are going to have to get used to a brave new world. Negative equity, I salute you.” Well, at least we’ll go down with vigour, if go down we must.

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