The IMF has warned that Britain's house prices are hugely overvalued and facing a spectacular crash

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The property boom is built solely on a massive, worldwide credit expansion that has now ended. The powers that be should have seen this coming a long, long time ago but were more than happy to take the plaudits of 'no more boom and bust'.

As a homeowner with a realtively low mortgage I am not talking through any pocket of any kind. But if anyone seriously believes the property market is anything other than a bubble waiting to pop, I suggest they think again. Credit for those with impaired credit histories are no longer available (at any price!) and high loan to value mortgages will be the next for the chop. This means, for first time buyers, much bigger deposits and for those remortgaging the possibility of standard rate mortgages at 7% to 8% for the forseeable future instead of 4.5% fixes.

Neither the mainstream press or the people on the streets seem to realise the gravity of the credit crunch - and it's not going away anytime soon. It's the trigger that will bring the property market and, very possibly, the economy falling back to earth - with a rather large bump!

- Rob, Isle of Wight

We've had 10 years of boom, is it such a shock if we went into a bust? Time to reduce and offload unnecessary financial risks if you havent already, and have a plan B just in case. Its not rocket science!

- I, London

I recently left the UK for Canada, the unaffordability of decent houses one of the main reasons for going. As first time buyers here, my girlfriend and I now have a three-bed detached house with garage in a nice area that cost 2.5x our combined incomes; a few months ago one of my relatives bought a two-bed flat in the South-West of England in an OK area... it cost more than our house did, and, I believe, around 4x their combined incomes.

How can anyone not believe that British houses are ludicrously overpriced if they've compared prices to the rest of the developed world? It's well past time for prices to crash so that FTBs won't be forced into slavery to the banks for the rest of their lives to buy even the lowest level of housing.

As for a crash hurting everyone, it will be far worse for those who've ridden the credit boom than it will be for the majority of the population who just want to be able to buy an average house on an average income. Even here in Canada if there was a price crash I'd be able to sell and move up to a better house for less money than it would have cost six months ago. So bring it on.

- Mark, Saskatchewan, Canada

I don't buy all this talk of the sky caving in if houses ever become more affordable. I think house prices follow the economy rather than dictating events. I cannot see how in anyway massive house prices are good for an economy, they indebt people and divide wealth.

I just don't agree with those who try and make people feel bad for wanting affordable housing. Affordable housing is vital for a society.

- Simon, London

HIPS report from Nu Labor anyone?

- Stephen W, London

Sad to see so many ill-informed, resentful comments from armchair economists who, for whatever reason, aren't on the property ladder. The bottom line is that a house price "crash" would hit everybody with rising employment and economic instability. This is nothing to rub your hands together about, whether you are a homeowner or not.
In any case, a crash isn't what the IMF is "predicting", as anyone who'd actually bothered to read the report will know.

- Mark, London

Some people seem to be pleased, (i.e. "I hope these financially over stretched...")
Having lived through a recession, I can only hope it is not too painful for the middle class...the ones that always suffer.

- Diana, London

Ian, for goodness sake, do some research! "UK (with the most expensive houses in the world)"? The UK is only the 16th most expensive place in the world to live. Japan is no.1.

- Marianne, SW France

All markets fluctuate. It was not long ago that concerns were raised as the % 'increase' per annum on property was reducing. It is foolish to think that the prices can and will keep increasing expotentially. e.g. a £100K flat bought last year, now worth £110K, must be worth £121K next year to maintain 10% inc./pa?!

I do sympathise with the first time buyers that have clawed their way on to the ladder, however the 'get rich quick' brigade that have kept the market overheated for so long with BTL should realise that the paper gains made are just that, gains on paper, and subject to change. The panic selling that will now follow on the assumption the market has hit its peak will drive the market down. The reticence of lenders on top of this, could make things far worse.

- Ian, London

Yes, There will be a correction, but there is unlikely to be a full blown crash, as last seen in the early 1990s. The housing market is complex and fragmented, and depends in part on the supply of land for new housing, an extremely lengthy process due to our outdated planning system.

- Michael, Herts

I do hope these financially over stretched, know it all people will eat their words when house prices finally come down to their worth and realise they have been victims of greed on the part of the estate agents and unfortunatly end up in negative equity!

- Brian, London

They keep saying this and it never happens. Hopefully though it will and me and others like me might be able to buy somewhere. Don't care whose house it is, if you hadn't been so stupid as to pay such a high price (and help push the prices up in the first place) you wouldn't have to worry about losing it now.

- S-M Hearmon, London, UK

These house price crash predictions seem to come along like no 253 buses.

Sadly, the statistics used by 'the gurus' are always based on 1996 or so when house prices were undervalued by any measure, so a trippling of house prices in the intervening period looks crazy. However, if they are measured from 1986 or 1988, they have only risen at a fairly average rate.

People have to have somewhere to live, and they are quite capable of working out how much they can afford after they have paid for all the necessities in life and then forgone the luxuries they think they can do without.

- George, London

Whenever I see 'IMF predicts...' I immediately expect the opposite as its track record is woeful. The fact is that most of us have one house that we need to live in, and its actual value is of little consequence until we need to sell it - even then we normally buy another one. Any price 'correction' will find more buyers, and over the long term prices will always recover simply because they don't actually make land any more! It may make life a little difficult for a while for Estate Agents, but not many people will consider that a bad thing.

- Paul, London

No-one wants house prices in the UK, or just in London, to "crash", as that would severely damage the economy, slow growth and increase uemployment. However, a flattening out in prices for a few years would help make housing more affordable, and would assist the many people who can't afford a decent home. This would be a great benefit to all of us, and would make Britain a much better and fairer place to live.

- Christopher Fowler, London, UK

Yup if you had bought a house each time people warned of a housing crash you would of done extremely well. All this just shows markets are very complex. Also it isn't really useful for these 'oh so clever' forecasters to say something like at some point prices will fall. That is like saying buy low and sell high. The problem is when and by how much they will fall. In London there might be a 20% fall but that only takes prices to where they were just over a year ago. So what use have idiots like the IMF been - none. If you'd of taken there advice you would be very miffed by now. Just shows go with common sense not fantastic theories from people who sit in offices the whole time and have no idea of what is happening on the ground.

- Andrew Latto, London

If this chap from the IMF is so clever, why couldn't he have predicted this before now. It's very easy to predict a financial crisis after it's happened, oh hail the IMF.

- Richard, Nottingham

Don't forget the IMF, OECD, The Economist has been wrong about house prices for the past 6 years!

- Mr Hammond, Lancs, UK

The party is now over due to the credit crunch. If you show me a mortgage lender still offering 10 x salary mortgages and I'll show you a liar. The second most potent factor to this crash is Buy to Let. Tough times for property speculators in 2008 I imagine.

- Dixie Narco, London

Charles, if it gives you comfort, carry on thinking like that. House prices are crazy. There is going to be a realignment, you might be lucky in the area you live in, but many are going to move sharply into negative equity with all the problems it brings with it. Its not a question of if, but when, the same goes for the stock market.

- Bernard , Horsham UK

Oh dear. It seems that some of your readers are in denial if they think the market won't crash. It is as sure as night follows day. Unfortunately the majority of people have been suckered in by the vested interests - the banks, building societies, estate agents, solicitors, surveyors, builders, BTL investors and all those who have an interest in keeping prices high.

- Michael, London, United Kingdom

The economy built on HPI is looking decidely shaky. Houses are now almost unaffordable for the average wage earner, the credit is drying up and interest rates are biting. I am afraid all bubbles deflate its just knowing when.

- David Barker, Maidstone, UK

The economy has been built on borrowing and debt against property for the past decade. This is not a realistic scenario for any nation. UK plc has been living off her 'credit card' for too long now. The chickens will come home to roost, eventually people have to work for money again, there will be a return to the ethics of saving and working. Larry Elliot sumed up the situation of Britain - with her uncontrolled property and debt bubbles - well in his book fanatsy island. So no more boom and bust?

- Frank, London

IMF fools, its common sense that house prices only go up and that x6 average salary is a totally sustainable price for an average house.

Never mind that the cost of mortgages has risen and banks have drastically
tightened there lending criteria with record numbers of mortgage applications refused last month.

Never mind the £1.4 trillion of personal debt (theres no sub prime here guv) the record oil prices and the credit crunch, house prices will allways go up, you only have to look at the last 7 years to see that.

- Ben, Barnet

Can't wait.

- Ken Booth, Kuwait City, Kuwait

You don't need an economics degree to know that house prices in the UK are too high and will fall.

What does amaze me is those who refuse to admit the obvious. And by doing so give a final breath to what is a bubble of huge proportions.

- Adam Taylor, North London

We would have had an HPC by now had it not been fro the econmically inept rate cut in 08/05. Since then we have had 5 rises (making 9) and a credit crunch of global proporrions has commenced (And will continue for 18 months at least) and BTLers have stopped buying so chains are no longer completing. We will certainly have an HPC - 30-40% on average over 4 0r 5 years.

- Jonathan, Essex

London is ridiculously overpriced after a decade of obscene greed from banks, EAs and a convenient blind eye from the feelgood, pay later government. The nonsense talked about 25% increases in 6 months in London is pure EA spin, applied to multi-million pound houses being haggled over by foreign money-no-object investors. If true, then clearly we are due for a 50% drop. Most sensibel economists see a return to 2001 levels at least. Thos who have MEWd, hold on to your hats...

- Mark, London

The IMF are right. Whenthey step in then you'd be wise to listen. It will happen. UK house prices are absurd.

- Mel Barrows, Tenerife, Canary Islands

Charles, does the fact that prices have gone up in London 25% in the last year after a decade long boom seem a little scary seeing that peoples wages have only gone up 4%?

Here is another prediction seeing as you like them so much, your house will only be worth half what it is now in less than 3 years. If you do some research and think out of the herd mentality, you may be shocked how perilous your major asset is!

- Keith, London

With Spain, Ireland and the US already crashing, the UK (with the most expensive houses in the world) isn't far behind.

- Ian, Brighton, UK

Average salaries, £25K
Average home, £180K

Over 6 times average salary, that is not sustainable in the long run, with wage inflation at around 3% (2% if you're as public sector worker).

- Kev, Swindon

"As it is, prices have gone up so much this last 12 months that a 25% cut would not even take it back to January prices."

Charles, please do be my guest and buy another house or two at the current bargain prices. I've no doubt your fortune will have increased by another 25% by this time next year. After all, house prices only go up! Quick, sign on the dotted line!

- Steve, Portsmouth, UK

Charles and Trevor obviously have no sound economic experience or know how.

This crash is coming and it is going to be a nightmare!

- Paul, Telford

Charles, I think they're talking about a 100% or more cut, not just 25%! In the 1990 price crash, house prices halved overnight.

- Phil Jones, London UK

I guess Nu Labor will continue with their HIPS project and really crash the market. In a way it helps the government as they wanted many more houses: soon they can buy them on the open market...

- Georgie, Islington, London

Yeah yeah yeah ... and so everyone's been saying for the last 5 years at least.

- Marianne, SW France

No wonder Crash Gordon does not call a popular election...
Over taxing, blatant economic mismanagement, mortgage banks troubles, HIPS, state overbuilding etc. I think is to blame.

- Jacqueline, Hampstead, London

If I had a £1000 for every prediction of a house price crash my house would be worth twice as much. As it is, prices have gone up so much this last 12 months that a 25% cut would not even take it back to January prices.

- Charles, London

Didn't they say this last year too? They're starting to sound like a broken record and they might want to look to the States for a big crash.

- Trevor Roll, London

Does this mean that George Osborne's Inheritance tax threshold proposals will now be revised downwards?

- David Dee, Canterbury

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