By Ben Richardson
BBC News Online business reporter
Predicting the next housing market crash is in danger of toppling football as the UK's favourite pastime.
Spotting a crash coming is not as easy as it seems
The media is full of warnings that the bubble is set to burst and many experts are now saying it is a question of when, rather than if, prices fall.
Recent industry figures and reports from the Bank of England (BoE) and the Halifax hint that cracks are beginning to appear.
Mortgage lending has dipped following interest rate rises and house price growth has all but ground to a halt.
The optimists say that this is simply a summertime blip that will quickly be corrected once people return from their holidays.
They point to the UK's solid economic growth and historically low borrowing costs, as well as high levels of employment and increasing wages.
A shortage of housing in the south of England will also help in insulating prices from a dramatic fall.
"We see these factors underpinning house prices at current levels," said Tim Crawford, group economist at HBOS in London. "We still look at the economic fundamentals and household balance sheets are in a good position."
Homeowners have had an incredible run during the past five years, with the building societies estimating that the average UK property now costs close to £160,000.
Many have taken on more debt as a result, helping drive prices even higher and fuelling a sense of increased wealth and prosperity.
According to HBOS, that trend is not set to end this year, with the bank predicting a 16% increase in house prices during 2004.
But this is where things become a little more murky.
While it is true that economic conditions are favourable to the housing market, many believe that prices cannot continue to rise at such a breakneck pace.
Have surging house prices put people off buying?
"Recent interest rate rises continue to take their toll on the housing market," said John Wriglesworth, an economist at Hometrack. "We see house prices bumping along the plateau over the next 12 to 18 months.
"Our house price inflation forecasts remain at 5% for 2004, and 0% for 2005."
What has concerned a number of analysts, however, is that the BoE is expected to raise interest rates once more this year, pushing its benchmark rate to 5%.
The problems that are emerging in housing market data do not reflect August's quarter point increase, let alone another hike before the end of December, they say.
The most pessimistic observers believe everything is stacking up for a crash.
A report on Friday from the Halifax, the UK's biggest mortgage lender, showed that house prices fell by 0.6% in August from the previous month.
The fall was the largest seen since December 2000, and the first since August 2002.
Earlier in the week, the Nationwide said that prices rose by just 0.1% in August, while the annual rate of house price inflation fell to 18.9% in August from 20.3% the month before.
The Royal Institution of Chartered Surveyors also has released a report showing the market is slowing, as did Hometrack.
The higher borrowing costs seem to have hit our appetite for mortgages as well.
The number of loans approved for house purchase fell from 112,000 in June to 97,000 in July, according to figures released by the BoE on Tuesday. These figures followed similar figures from British Bankers' Association (BBA) last week.
Ed Stansfield is an analyst at Capital Economics who believes that any optimism is misplaced.
"The bottom line for us is the overall level of house prices," he explained to BBC News Online. "There are strong signals that the housing market is overheating."
Capital Economics is not predicting a sudden drop in prices, but a slow 20% grind lower over the next 2-3 years.
The ratio between house prices and average earnings is at a historic high, he said. The last time it was close to current levels was in 1989, just before the market tumbled.
Some of the fast-growing areas such as Wales and the North of England are now experiencing a slowdown, he adds.
Mr Stansfield concedes that economic conditions are better than they were in 1989, but adds that prices can drop even without a recession or rising unemployment.
Market momentum can suddenly change if enough buyers start believing that prices are too high and sellers start getting twitchy.
With the experts unable to agree where the market is going, the dilemma for homeowners will be deciding when it is about to turn and whether it is worth trying to get out before it does.
Have you seen evidence of a housing market slowdown? Tell us your views using the form below.
The BBC may edit your comments and not all emails will be published. Your comments may be published on any BBC media worldwide.
I am in the process of moving house and therefore have been watching house prices in my area like a hawk! Until about July, two and three bed houses sold on my estate in days, sometimes hours as it's a popular estate. In fact there was a waiting list at estate agents for 2/3 bed properties. Now I am seeing the same properties take a few weeks, sometimes as long as 5 or 6 weeks to sell.
Paul, Huntingdon, UK
The whole house price boom has been artificially inflated by the fact that govt stats combine both new builds and resales. In Surrey, this gave a rising price index of +7% last year. However, if new builds were removed from this figure, the index was -12%. This shows two things - new builds are outrageously overpriced and the housing bubble burst some time ago.
Prices are stagnant in my area, properties remain unsold for several months. The market is very different to 12 months ago. In my opinion prices must fall. Property is just absurdly overpriced at the moment
Cooling not crashing - all that is happening is that apprehension caused by 5 successive interest rate rises and Mervyn King's two warning speeches has already slowed the market for some time. The Bank of England has acknowledged that house prices are no longer rising and consumer spending is down and they have both implied and stated that interest rates will go up by no more than another 0.25% to 0.5% to a neutral rate which will still leave us with the lowest Base Rate for about 30 years, in an economy that has both full employment and a widespread popular distrust of alternative 'investments' diminishing pensions, endowments, ISA's, unit trusts etc. This coupled with an officially stated shortage of 1.2 million homes in the South East means that once people realise that there is an effective interest rate ceiling the market will become more active albeit on a slightly more price stable basis until incomes have risen.
Alan Tayler, Wivelsfield, East Sussex
House sales here have stalled with a number of properties being marked down over 10%. Not a lot you might say until you consider its in excess of £30K on a £300K house. This is the start, local wages here are average of £15K per annum, and interest rates are rising and many household are borrowed up to the hilt. Even without the application of the recent increase in oil, the next 12 to 18 months are going to interesting times.
Matthew, Brecon, Powys
It is most certainly not slowing down in Edinburgh!!! I have just purchased a flat and had to pay nearly 50% over the asking price.
Mark Thomson, Edinburgh
Here in Bishop's Stortford we're seeing "For Sale" boards staying around much longer than we're used to. It seems like half the town is for sale, and no one is buying. The market has already stalled, but sellers are still in denial. It will take a few distressed sellers to start cutting their prices, then buyers will see larger houses in their reach if they wait a few more months; and then the whole market comes tumbling down, just like it did in '89.
Dave Brown, Bishop's Stortford, UK
As a first time buyer I have been waiting and waiting for the 'crash' which has not materialised. In my local area we have the crossrail network and Ebbsfleet along with massive redevelopment and new development. I am sure in some areas house prices will slow and possibly drop but I think people are being too general when talking about the crash.
Tim Prince, Gravesend UK
Houses in this area have easily tripled in price over the last 7 years and until only a month ago anything was selling for asking price within a week or so of going on the market. We, as hopeful first time buyers, were totally priced out. Now it seems that there are more and more properties coming onto the market all the time, and in my village not one for sale sign has changed to sold in over two weeks. I am amazed at how suddenly things have changed. Reading the property section in the local paper I found that almost a quarter of all properties for sale had 'no forward chain' almost certainly speculators and buy to let landlords cashing in at the top. Only problem is they seem to be far too late.
Simon Hogwart, Redruth, Cornwall, UK
With the average Welsh house price at 7 times my wages I am fervently hoping that prices crash, as are most of my friends. None of us can afford a shed at the moment, let alone our own home.
I sold a marketable house in Surrey at quite a discount to a reasonable asking price in July after having it on the market for over 9 months. The number of potential buyers viewing dropped off markedly after Easter. From mid June the estate agent claimed he was having problems keeping chains together as several buyers were getting cold feet and pulling out of deals even where they had agreed prices well under the asking price. Certainly from my position, there has been a definite cooling off in Surrey and the chill will inevitably move northwards as it did in the late 80s.
Matt, Surrey, UK