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Last Updated: Tuesday, 22 June, 2004, 11:55 GMT 12:55 UK
Will the housing bubble burst?
Property sale signs
The governor of the Bank of England has warned people should buy with caution as there's a greater chance now than ever before of house prices falling.

Mervyn King also indicated that further interest rate rises are looming.

His comments come just days after the Bank's Monetary Policy Committee increased interest rates again, bringing the base rate to 4.5%.

ASK THE EXPERT
You put your questions to Milan Khatri, Chief Economist at the Royal Institute of Chartered Surveyors in an interactive forum


The Royal Institution of Chartered Surveyors (Rics) have confirmed house price growth has slowed for the first time in six months due to the rise in interest rate.

Do you think the bubble will burst? Are you worried about your property? Or maybe pleased that this might mean you'll be able to buy?

This debate is now closed. Read a selection of your comments below.


Your comments:

I bought as a long term investment
Terry, Epsom, England
As one of the "buy-to-let people" can I point out that if I had chosen to buy shares in a bank or building society I would be making a "profit" in exactly the same way. Without investors it would not be possible for the banks and building societies to offer mortgages in the first place. I bought as a long term investment and will sell when I retire - probably in about 10 years time - so I doubt a price crash will affect me.
Terry, Epsom, England

This has come about because of a lack of affordable starter homes for first time buyers. Most new housing estates seem to consist entirely of 4+ bedroom homes for people with large salaries. Let's have some realistic houses at a realistic price!
Anne Brothwell, York

I own my own home and I also have a small property that I have rented out for over 8 years. I was unable to sell it 8 years ago so I decided to try letting which has been a success. However I do not see myself as a money grabbing property magnet. I only just cover the costs after all these years and I am providing a home to many people over the years.
Steve, Stockport

Why is everyone so obsessed about "buying" a house? What's so terrible about renting - enough people do it in other European countries? Why do we have to be so hell bent on home ownership (apart from the fact that everyone else is doing it).
Chris, Cambridge

If the bubble bursts, thousands of home owners will find themselves with negative equity as did many in the early nineties so few can afford to sell their properties and so the market stagnates. We need a levelling off but a slump would bring nothing but misery all round.
Derek Blyth, Bolton, UK

Why do people relish the misery of others? Some of us work very long hours to keep a modest home and will be almost insolvent if interest rates rise too high. I'm not moaning but sometimes there are innocent victims who may be paying a full mortgage after a marital split and face near disaster.
Ken, Southampton

It's a pity that Mr Brown and the Bank of England aren't as creative in finding a solution
Stephen Fox, York, UK
I have just sold up in the UK and bought a house in Sydney, Australia where I shall emigrate to in 12 month's time. The property market in Sydney has been as inflationary as that in the UK but over there the State government has introduced punitive taxes for "buy-to-renters" and dispensed with stamp duty for first time buyers. The result has been a curbing of house price inflation without the need to increase interest rates which would threaten the economy as a whole (mainly exports). It's a pity that Mr Brown and the Bank of England aren't as creative in finding a solution to the plight of first time buyers in the UK.
Stephen Fox, York, UK

There has been a mass hysteria in the house market with all ends buying to get ahead. A lot of people are going to be repenting at leisure. The sums are simple with houses at five times salaries, which are capped to inflation, we are definitely in for a fall.
Morgan Bryan, Guildford Surrey

There's a lot of talk about 'simple economics' here, but unfortunately that doesn't apply here. The fact is that there are not enough houses for the people that want them. No housing investor is going to sell for a price he is not satisfied with, particularly when he can sit and collect rent. Since it is these investors who control a large proportion of the housing market, prices will now never drop below a certain level.
Evan, UK/Dubai

The buy-to-let people seem to think that any "profit" they make comes from thin air. In reality their "profit" comes from the indebtedness and misery of others : pure and simple. When the crash comes the "right" thing is to help the single-owners out and let the speculators go to the wall.
Colin Thomas, Olney, Bucks, UK

Prices may fall in the short term but historically prices double on average every ten years. This has been the case at least since the beginning of the 20th century. Property is a long term investment, whether you are buying to rent out or as your own home. Don't buy if you will need to sell in the next five years.
Neil, Kent, UK

I hope the bubble does burst, for the sake of first-time buyers
Rob A, London, UK
I hope the bubble does burst, for the sake of first-time buyers. The only people who will suffer are the ones who have borrowed irresponsibly - harsh, but fair. I'm 26 and live in London. My wife and I have a combined income of about £60,000 a year, and we can't hope to buy without a seriously frightening salary multiplier and about a 95% mortgage. We're just not prepared to face that kind of risk.
Rob A, London, UK

No one in these comments mentions the impact of the Estate Agent. In my home town there are two semi detached houses next door to each other and less than 10 months ago one sold for £92,000. The same agent now has the house next door up for sale at a whopping £140,000! Market forces it's called. Greedy agents and gullible buyers would be nearer the truth.
Derek Fisher, Barow-in-Furness UK

Why the hostility towards buy-to-rent investors? I went this route about 4 years ago because of the failing pension schemes that I have. Am I not responsible to try to ensure I do not become a burden on the state? Surely it is sensible to provide for our retirement?
Terry, Epsom, England

So the bankers decide to raise interest rates and guess who will benefit? The banks! You forget that all this extra money is going to go straight into their coffers.
Richard, Surrey, UK

The average house price is now 8 times the average salary. It doesn't take the governor of the BoE to tell us this is an unsustainable situation and thus a crash is inevitable.
Philip Le Roux, Hampshire England

I think the bubble will burst but not to the same extent as in the late 80s and early 90s.Interest rates will not get anywhere near as high as back then. We do need to get away from a culture where buyers assume their home will go up in value. I would certainly be nervous about buying a house just now because I doubt whether this time this year its value would be higher.
John Jellema, Motherwell, Scotland

A home is supposed to be a home, not a get quick rich scheme
Alex Moon, Reading

A home is supposed to be a home, not a get quick rich scheme. I think the capital gains tax should be paid for property sold within two years of it being bought, or five to 10 years, if the owner does not occupy the building for more that 50% of that time. That should put a stop to buy to let people who are out to make a quick gain, but doesn't affect the people who go in for a long term investment. The short term investor is a major cause of the sudden house boom.
Alex Moon, Reading, UK

The Bank of England should not meddle with interest rates. Sometimes I am not quite sure what these people are being paid to do? It seems homeowners who are already on a tight budget with all the taxes coming from all corners they have to pay, on top of an inflationary council tax, are being unfairly penalised by the bureaucrats from the Bank of England, most of whom functioning according to the I'm all right Jack principle. If the bubble burst it will be their fault.
John R, Sunderland, UK

I feel sorry for first time buyers but I would never wish for a property crash. Most of the readers comments seem to be based on jealousy and nastiness.
Fiona, Tunbridge Wells, Kent

I have buy to let investments, I have had them for the last 10 years. My tenants are long term even though the tenancy agreements are short hold tenancy agreements. There is a shortage of good rental accommodation since the Conservatives' policy of selling off council property. This market is led by the lenders not the buy to let investors. That's what we are investors, investing in property instead of the stock market. My grandfather did the same; buy to let is not a new concept!
Jo, Macclesfield

Stop knocking buy-to-let investors. What's next in this nanny state of ours? Restricting the number of shares people can own or capping their salaries if they have worked too hard to get a great job - just because you're jealous that someone has more than you?
Cali Bird, London, UK

Here in Sydney, we have First Time Buyers grant of $7,000 plus no stamp duty on property up to $500,000. All that happens is more people than ever get into the market, pushing up the bottom end prices which has a knock-on effect. Giving away money is artificially fiddling with the market.
Paul Green, Sydney, Australia

I am very angry and bitter at these get rich quick, buy a load of houses merchants
Anon, UK
I think it's about time we had a crash. I live in a holiday town in Cornwall and most the year about 50% of the homes are lying empty as they are holiday homes. Buy a place in Cornwall, get a few holdays then make a few quid with the price rises, simple! Cornwall is the hardest place outside of London for first time buyers to get on the property ladder. I am very angry and bitter at these get rich quick, buy a load of houses merchants and all they have done to the hardworking once comfortable salary earners of this country. When the crash comes I won't feel sorry for these guys only the one home families trying to make a crust.
Anon, UK

Of course it'll crash. It's simple economics... People cant afford to buy houses at their current high prices. Interest rates are on the up to curb people borrowing too much. If no one wants to buy your house because they don't want massive debts, you'll lower the asking price. Other sellers panic that houses are suddenly getting cheaper and their house isn't selling, and before you know it, the bottom falls out the market as they all race to sell their house.
Karl, Northants, UK

A house is a home, not someone else's investment opportunity. Quite apart from the effect on property prices and availability for first time buyers, my main objection to buy to let is that tenants have no security. Get rid of assured short hold tenancies on buy to let properties and this will stop it being such an attractive option for the 'get rich quick' brigade.
Lesley, UK

Why does the banking system in Britain have no secondary market for mortgages?
Keith, UK/US
I've been asking a friend who is a highly placed exec in a large mortgage bank for the last 2 years to find out why the banking system in Britain has no secondary market for mortgages as they have in the US. The fixed rate, fixed term mortgage market doesn't eradicate bubbles bursting but it does temper their impact. Surely the government can find the money to fund this entity which would do a lot to stabilise the housing market and subsequently the economy?
Keith, US/UK

Those people praying for a bursting of the property bubble are forgetting that this will bring with it a recession. Far better the property market stagnates, and allows wages to catch up.
MB, UK

The bubble will burst if interest rates significantly increase and one other factor happens, i.e. slump in city leading to redundancies.
Robert Baxter, London UK

I think it's certain the bubble will burst. We now live in a Britain where first time buyers can't afford to get onto the property ladder even if like myself they earn a pretty decent wage. In that sort of housing market a collapse is just a matter of time.
Colin Wright, UK

The cost of owning a house will always remain the same
Mr M Shafiq, London, UK
The cost of owning a house will always remain the same. If interest rates go up, then prices will drop. The monthly payment of a mortgage will pretty much stay the same. Once the buy to let market is controlled, the prices will fall
Mr M Shafiq, London, UK

Everyone is in debt, interest rates are going up, and inflation is edging up and many 'buy to let owners' are struggling to let their homes and may start shifting them to the open market (many do not have the option of dropping rents). This will ease the supply problem slightly. If house prices also start going down slightly, people will feel less rich, so they will stop spending in the shops. This will bring on a recession, and unemployment for many, and then prices will crash as there will too many homes and not enough mortgagable buyers.
Julian, South East

Houses cost what people are prepared to pay for them. In this country people seem quite happy to pay ridiculous prices for a number of reasons:

  • They are too young to remember the last housing crash
  • Unlike most of Europe, renting is almost considered a sign of poverty.
  • Everyone else seems to be making money on property
  • Interest rates are low, unemployment is low - at the moment.
  • The TV schedules are full of programmes about other people with great houses.
    Jump on the bandwagon when there are plenty of spare seats, not when there's a crowd on the roof.
    S Ross, Leeds, UK

    The banks have to take some responsibility
    L, Scotland
    The banks have to take some responsibility. When my boyfriend and I went for our mortgage consultation we were actively encouraged to take more money than we knew we could afford. We stuck to our guns, but I'm sure lots of folk would be tempted by offers or four-and-a-half or five times their salary. If people weren't given mortgages for over-inflated prices, the market would have to slow.
    L, Scotland

    Building a house has a finite cost. Surely legislation could be introduced to make developers quote the selling price of their development on completion and have them stick to it. It is ludicrous that 1 new home can be 10's of thousands of pounds more than it's twin next door just because it took another couple of weeks to complete. This way new prices could be used to stem second-hand prices. Obviously, the question of profit-margin would have to be a desirable one.
    Ian, Midlands, UK

    A lot of these comments seem malicious. I purchased my first home in March after saving for three years, waiting for prices to slow down. Although I was desperate to buy I certainly didn't hope for a crash which will have devastating effects on many people. I believe that in these times we should be limited to owning one property and more should be done to help first time buyers (grants etc), and I believe there should be a large tax on multiple owners, but I certainly don't hope that people lose their homes.
    Leigh

    At least the buy-to-let mob rent out their extra houses, its the buy to holiday mob who keep the houses practically empty who are hogging the extra houses. Any house that is not lived in for less than 90% of the time should be subject to an extra tax...
    Carol, England

    With an election looming, interest rates will not go sky high
    Nick P, Beaconsfield, Bucks
    It won't crash because demand outstrips supply, because employment is high and the economy is strong. With an election looming, interest rates will not go sky high, either. Governments do not allow such things to happen. The number of buy to rent properties is eroding rental returns, and so the more affordable rented properties may well hold back the worst of further increases. As for those who constantly whinge about prices, perhaps they might consider buying cheaper cars or eating out less often - just as we did when we wanted to afford our first house. Why can't we have 50 year mortgages, I wonder?
    Nick P, Beaconsfield Bucks

    My Mum bought a tiny flat to rent out because she came into some money and in the absence of a decent pension scheme decided to invest in property to safeguard her future. Why would you deny her that? It's sensible investing, not greed. She rents it to the local council so gets less rent but the council get a place they can use to house a single mum who faced domestic violence - in a nice area.
    Lindsay , Farnham, UK

    My wife and I just had our first baby and are in the final stages of buying our first house. The timing was not in our control because we need a home now and we have saved up just enough to pay the deposit. The government should distinguish between the genuine home owners and the greedy "gamblers" when making policies. It is totally unfair to make the property market behave like the wild stock market for a simple reason: People who don't like the risks of the stock market are perfectly free to stay away from it, but we cannot stay away from owning our homes. I'm not expecting a fat profit and will be happy with a stable property market.
    S Yang, London, England

    Send a clear message to the buy to let hogs who have pushed the market so high
    Steve Picton, Hereford
    How about taxing 2nd/3rd/4th etc homes? This would send a clear message to the buy to let hogs who have pushed the market so high. Will it crash? You bet it will. Will the big player get hurt? No just the small-timers as normal.
    Steve Picton, Hereford

    A lot of people are prone to 'laying up treasures where moth and rust destroy and where thieves break in and steal.' In the 80's there was an unshakable confidence in the stock market but in '87 that went pear shaped. These days people are investing in property with the same if not more faith, and I rather fancy a lot will get their fingers badly burnt when the almost inevitable happens!
    Graham Fisher, London, UK

    The market won't crash because the demand outweighs the supply.
    Abdullah, West Yorkshire

    Stop buy to let, this will solve the housing problems in our area. In Tunbridge Wells 80% of new builds are brought of plan by buy to let investors. Simple and easy solution!!
    Nigel Peters, Gatwick

    You wouldn't be laughing if you were in my position
    Anon, Slough
    Me and my Fiancée bought our first house just over two months ago. We managed to afford it by getting a deposit together. It was extremely tough, but we finally managed it. So lets all laugh at people like me, who are technically still first time buyers, when we loose our house. You wouldn't be laughing if you were in my position. You make me sick.
    Anon, Slough

    I am on a good salary - 35k my girlfriend is on about 14k, and we re finding it hard going to find a house we can afford! So come on BURST, teach all those greedy people with more than one home a good lesson!
    Chris, UK

    Future of the housing market?
    1. Buy-to-let investors start selling-up to put their money back into the relative stability of the stock market.
    2. Supply starts to outstrip demand.
    3. People find it hard to sell their houses and prices start to drop.
    4. Buyers won't buy once prices start to drop.
    5. Kaboom! The market crashes.
    6. Buyers return to the (now affordable) market.
    Chris Henderson, London

    Since getting our mortgage offer our repayment amount has gone up several times
    CP, Leigh, UK
    My partner and I have just bought our second home. Due to various legal issues it is taking rather a long time to complete. Since getting our mortgage offer our repayment amount has gone up several times. If it continues at this rate we won't be able to afford it before we have even set foot inside! Something has to give.
    CP, Leigh, UK

    Well, if it doesn't then a whole generation will be left renting and paying off other people's mortgages. We are desperately looking to buy our first home. But until we hear that 'pop' we have absolutely no chance.
    Kate, Sheffield

    Unless substantially more houses are built, I can't see a housing crash - demand outstrips supply so much that there will always be some form of rising market. Given that land is a finite resource, a better solution than the Government's "thou shalt not build on green land" needs to be found if we are to come close to satisfying the demand for an additional 30,000 houses per year. The real question is whether the current price rises (in my case somewhere around 50% per year) can continue, or whether they will simply fall to inflation or thereabouts.
    Bryn Roberts, planning solicitor, Richmond, Yorkshire, UK

    Prices will not crash. There are just too many first time buyers
    Anon, London
    Prices will not crash. There are just too many first time buyers, who want to get on the property ladder. These people will stop the market from falling too much. London prices have already slowed.
    Anon, London

    Keep up the confidence guys. The higher the prices go, and the more "money" greedy property owners think they are earning, the harder and further the fall. I can't wait to take your house off you at a fraction of the current cost - you shouldn't have been so greedy!
    Michael Watson, Reading, UK

    Coming from a working class background, growing up on a council estate I never aspired to own my own home. I now own 2. This is the result of sensible investing. I lived through the boom of the 80's and the crash of the early 90's. If you can't afford repayments comfortably then simply don't buy. It's not fun having to share rented accommodation, but hey - who said life is fair?
    Pip, Manchester

    Interest rates should have been adjusted before now. Many people have borrowed and spent on the back of over-inflated property prices, artificially stimulating the economy. The spectre of "negative equity" is also looming as a result.
    Andrew McCarthy, Pontevedra, Spain

    What astounds me is the way people are predicting that 'this time will be different from last', that there won't be a crash. Why should that be? We are economically sound at the moment but economies operate on a cycle too, inflation is threatening and with oil prices highly volatile, all the ingredients are in place for a 'reminder' of what happened in the late 80s/early 90s. How short our memories are!
    Mark Janes, Leicester, England

    The impact of a crash could be widespread
    Simon Says, Hants
    The impact of a crash could be widespread. It's not just restricted to people who have bought new houses; a lot of people have released equity from their properties to buy new cars and other luxury items. Therefore it could slow down consumer spending as well.
    Simon Says, Hants

    Kevin, Leeds said "Why don't they just put the interest rates up in one go" (below). That's a great idea. What would be even better would be to say, in 6 months time, interest rates will be set to 6 percent. That will give us all time to plan ahead, and it will stall the housing market right away and everyone gets a chance to arrange their finances beforehand.
    Paul, Melksham

    Shall we pop it? I've got a pin and I need to buy a house.
    Jeremy, London, UK

    House prices are unsustainable and they will eventually fall. In addition to low unemployment and interest rates, the boom has been partly caused by speculators taking money out of the stock markets and into buy-to-lets. When the economy improves and house prices have flattened, they will speculate elsewhere and sell up, causing downward pressure on prices. Also, sadly, there will be another recession, and when it comes unemployment and interest rates will go up, and ordinary people won't be able to service huge loans anymore. For me, the sooner they fall, the better.
    Peter, Oxford

    When people take out a mortgage they should work out if they can still afford the repayments if the interest rates go up. Because people do not do this they buy houses that they cannot afford, thus creating more demand. So these people are as much to blame as the Buy-To-Lets.
    Andy, London, UK

    I hope there is a crash so that I have some chance of getting on the property ladder
    Chris Malpas, London, UK
    I hope there is a crash so that I have some chance of getting on the property ladder. I earn a fairly good salary but in London I cannot afford even a small flat in the less 'desirable' areas let alone anywhere else! I won't be laughing at those people who are affected by the interest rise but first time buyers don't stand a chance at the moment.
    Chris Malpas, London, UK

    So you really think that if the prices crash you will be able to buy a house? You may be able to afford to, but there won't be any to buy - people just wont sell unless absolutely necessary. Prices will then eventually creep back up, and you will still be in the same boat.
    Tracy, UK

    When prices crashed last time interest rates were 17%, unemployment was high and the pound was weak. When interest rates are rising only by a quarter each time (meaning the average homeowner will be paying between £15-£30 extra a month) and unemployment is at an all time low it will be a long time before many people start to feel the pinch. The market will only crash if all of the above factors combine again and people can't afford their mortgage repayments.
    James, London

    What I absolutely think is ridiculous is when I see lots of adverts in papers saying "Affordable housing - prices start at £160k..." How is that affordable to a nurse or a carer on £12k a year then? Someone tell me please?
    Si H, London

    We need a new planning system that balances the need for open space more fairly against the need for homes
    Chris, Southampton, England
    The underlying problem that caused this mess is that planning decisions are made by people who have everything to gain by restricting development. I am surrounded by unused land, which our local planners will fight to their dying breaths to save from development. At the same time, hard working people can't afford to buy a decent house to raise their families in a decent way. It's sickening. We need a new planning system that balances the need for open space more fairly against the need for homes. No amount of meddling with interest rates will solve the problem.
    Chris, Southampton, England

    House prices in London are so high that I was forced to buy in Woking. I am really worried that I may end up in negative equity if the market crashes and be unable to move away from the area. If interest rates continue to rise I will have to use my savings to supplement my mortgage repayments.
    Peter, Woking, England

    One of the best ways to start a crash is to start talking about a crash. There's no reason why things just can't calm down slowly and hopefully then people (like me) won't find themselves in a negative equity situation. Stop assuming that boom and bust is the only way and we might actually avoid it.
    Katherine, London, UK

    When you think about it, it's absurd that there should be a "right time" or a "wrong time" to buy something as essential as a home. The problem is that housing is not a free market: in the UK there will always be higher demand than supply. The government should long ago have introduced taxation and levies to reduce the incentive to buy-to-let or to own multiple homes.
    Ben, Cambridge

    There are going to be a lot of people in a very serious financial mess
    Anon, Thornton
    A price crash, thank God, wouldn't affect me as we bought our home 8 years ago when the prices were still sensible and we aren't bothered about how much equity we've accumulated because we don't want to move. However, friends of ours have just bought a £100,000 house using a variable-rate mortgage. This leaves them with £20 a week after bills and they are panicking about the recent interest rise. It will be good that first time buyers have a chance, but there are going to be a lot of people in a very serious financial mess if they do crash.
    Anon, Thornton

    Yes, but only if the government actually investigated the claims made on self-certificated mortgages. These mortgages mean people can easily lie about their income and so afford much more expensive houses, artificially inflating the price of the average house. It is quite simple to do but also simple to investigate. The small crash that this would cause would damage the economy which is why it is being ignored. Instead our government will await a much longer coming and much more dangerous crash in the economy in general. Since when have you seen a politician look at the long term?!
    Dave, UK

    The high price of property is mainly due to the Governments failure to sort out the planning system and in turn the lack of new housing being built throughout the UK. It's hardly right to blame the buy-to-let purchasers who are simply trying to make some money. If the bubble does burst it will yet again be down to the mess of our planning system and the lack of action taken by this Labour government.
    Jamie A, Winchester, UK

    Why don't they just put the interest rates up in one go, instead of keeping everybody guessing every month?
    Kevin, Leeds
    Why don't they just put the interest rates up in one go, instead of keeping everybody guessing every month? At least we would all know where we stand, including first time buyers. All lenders should also provide reasonable fixed rates for the life of the mortgage so people trying to provide a decent roof over our heads are not held to ransom like this.
    Kevin, Leeds

    Well, I'm pleased to see good old British schadenfreude coming to the fore (Catherine D, and others). No sooner do we find ourselves looking down the business end of a crisis than the smug "well, I hope it *really* crashes" brigade come out. Well, I was a first-time buyer about 9 months ago. I saved and saved, managed a 5% deposit and got on the ladder. Now, if rates go up significantly, I may end up losing my home. Does that make the "laughing" of people unaffected by this any sweeter?
    Robert, London, UK

    I agree that the trends of the last few years can't be sustained much longer, and it would be a good thing all round for house price rises to slow. However, these doom and gloom predictions by the media can have too much power over a public that behaves like a flock of sheep. A few stories about oil supply caused mass hysteria and a UK petrol shortage that was much worse that it should have been. I'm just worried that these rumblings about the housing market will turn into another self fulfilling prophecy by causing mass panic. Calm down guys!
    Louise, Macclesfield, UK

    Crash, crash and crash some more!! Give those of us with realistic incomes a chance to own our own homes!
    Steve, Wirral UK

    God I hope so! First time buyers who aren't on silly salaries (or with crazy credit card debts to get the deposit) can compete with buy-to-letters and downsizers. If the current state of affairs carries on, won't we just end up with the centuries old system of feudal landlords owning entire towns and the peasants who have to rent them because land is disproportionately expensive? - serving the needs of the minority landed gentry - So this is progress is it? Also interesting to note that most people who criticise the UK's home ownership obsession are themselves homeowners. It must be something to do with independence and not feeling that your throwing your money away on rent at the end of every month with little say in your home environment.
    Vince, London

    Prices stopped rising where I live at least two years ago but there was no crash. There may be some areas where prices will drop, but unless the supply picks up significantly I don't believe that the bubble will burst. These small increases in interest rates only make a significant difference to those who have variable interest-only mortgages or similar risky products. For most people I don't think that it will be a disincentive until interest rates are above 6%.
    Alan P, London UK

    Mervyn King and others predicate their remarks on the assumption we earn enough to buy in the first place
    Andrew Taylor-James, London

    This really is a joke. People and agents start crying when the rate of growth goes from 20 to 14% late last year. Try being in the fantasy that is affording a home here in London. I'm now stuck forever renting in an even more over priced rental market because I have a public service job which will never pay enough to afford a home unless prices fall through the floor. Mervyn King and others predicate their remarks on the assumption we earn enough to buy in the first place. No we don't!
    Andrew Taylor-James, London

    Homeowners need to understand that extremely high house prices are not good for the economy in the long term. Hopefully this is the beginning of the end for very high house prices. Those that have stretched themselves will now have to be more prudent with their money or lose their house.
    Luke, Essex

    Working for a finance company we are expecting the bubble to begin bursting within the next 12 months. While a crash is unlikely the current prices cannot be sustained in the long term due to lack of first-time buyer interest. Personally, I am hoping that a crash occurs as only a drastic reduction of prices (around £30k for a mediocre home) will enable me to purchase a home.
    Stephen, Cardiff

    At last, some sense is being shown by the BMPC, in slowing down this ridiculous growth in property prices. Now maybe ordinary, hard-working people will be able to afford to buy their own property - surely the right of everyone in well-developed countries such as ours.
    David, London, UK

    There is simply no way that current prices reflect economic fundamentals. It is a speculative time bomb that could cost us all dearly and which the government should not have allowed the creation of. Not to mention the injustice of millions of hard working Britons denied the chance of owning a home by a rapacious market.
    Jay Sorrels, London

    Oh I hope so. The cycle is due a crash, they always come. I'm waiting and preying that it's an almighty crash for two reasons. First, it's the only chance that first time buyers will ever have of getting on the ladder. Second, it will shut up all these short-sighted smug home owners whose only topic of conversation is how they get estate agents in to value their properties every now and then to give them an ego boost. Crash, crash away! Bring on the negative equity! Thousands of us will be laughing!
    Catherine D, London, UK

    Oooh I really hope so. I feel sorry for all those that stand to genuinely lose out, but have no sympathy for the buy-to-let speculators who got us into this mess in the first place. At least us first-time buyers might now have a chance to get on the ladder.
    Jo, UK

    Over-confidence in the market is what's fuelling runaway prices. The belief that the market will never crash may end up being the very cause of a crash.
    Jamesh, London, UK





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