House prices are sliding as a result of the difficulty in obtaining mortgages. Homebuyers are facing the consequences of the profligate behaviour of the banks whose executives had been focused primarily on their own payouts. Inflation is gathering pace, thanks to higher food and fuel bills and, according to Nationwide, the average property value is £10,077.

This last detail is the clue that we are not talking about 2008 but 1974. Nationwide's latest average house price may be £178,855, but there are parallels between the Glam Rock era and the Amy Winehouse age.

During the boom of 1972-73, smaller banks lent imprudently to property companies. These banks came close to collapse when interest rates were raised late in 1973; the Bank of England had to bail them out. The word “crunch” was more associated with the toffee-filled Curly Wurly, the decade's most celebrated confectionery launch. But the squeeze facing borrowers was similar to the effects of today's credit crunch, although not in every way. The loan clampdown of 1974 affected only men; single women did not apply for mortgages as they always faced refusal.

This week Abbey and several other banks once again tightened their lending criteria. The fear that the scarcity of finance will continue until the end of 2008 and beyond is the main reason why there are now more predictions of large price falls.

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• Downturn and downtown in 2008: how investors in UK city-centre flats may feel the chill first

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• Comment: the property market slowdown

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• The City’s ardour for status homes remains unabated

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• Does Inside Track's collapse spell the end for property investors?

• Versace does designer flats in Dubai

The economist David Blanchflower thinks it “not implausible” that the market could fall by one-third. Yolande Barnes, Savills' residential research director, forecasts a 25 per cent decrease by the end of 2009 if the credit crunch carries on. HBOS talks of “modest declines”.

Whichever view you find most persuasive, there is no doubt that, while sellers are now being more realistic about asking prices, transactions are falling through because buyers cannot get mortgages. Banks - previously happy to hand out self-certified loans to individuals with no proof of their earnings - have become ultra-cautious even with the creditworthy. In one case, a man borrowing just £200,000 to buy a £750,000 property had to show he had a substantial sum in spare savings.

More interest rates cuts might not steady bankers' nerves, but they would lend support to the housing market, or so says Professor Blanchflower, who deplores the slowness of the Bank of England's monetary policy committee (MPC) in this regard. He is on the MPC, but takes issue with other members.

Nationwide's April 2008 survey gives weight to the Blanchflower claim. There has been much emphasis on the 1.4 million borrowers whose repayments will soar when their super-discount fixed rate deals expire this year. But Fionnuala Earley, Nationwide's chief economist, says that 5.5 million borrowers with variable rate and tracker loans (linked to the base rate) are much less vulnerable, having benefited from the 0.75 per cent base rate reduction since December.

Such figures are one major difference between 1974 and 2008: the property statistics industry is a recent phenomenon. In 1974, no one could have foretold to what vast extent the economic climate and the financial position of single women, single men, couples and families would be affected by the fate of the housing market. The banks should be aware of this as they decide on their lending strategies for the rest of 2008.

OFF THE TRACK

Inside Track Seminars, which claimed it could turn “any bright and hungry person” into a buy-to-let millionaire, has become a casualty of the downturn. The company called in the administrators this week, as we report on page 4.

Its legacy will be a set of principles as to how not to be a successful amateur landlord. These involve paying £2,500 for a hard-sell session where you will be urged to borrow to buy citycentre flats you have not seen. Quick profits will be promised, although the values of such properties are falling because they are in over-supply. The main inducement will be a discount on the price of the apartment, although the developer would probably offer the same discount if you contacted him directly.

Moreover, it will be nothing like the size of the reduction now being enjoyed by the professional buy-to-let investors snapping up whole blocks of such apartments.

COUTURE CRIBS

The prospective purchaser of a £25 million London mansion got gazumped last week. But this is not the only proof that the credit crunch and the super-rich have yet to become acquainted. The most expensive of the 120 homes at the Palazzo Versace Dubai development, launched this week, will be £12 million; the smaller ones are about £2 million. The Versace interiors, shown above, may look florid, but they cannot compete with the purple prose of the press release which talks of “exclusivity, beauty, quality and opulence.” A bathrobe is thrown in with the deal - value £1,500.

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