I strongly suggest that your niece does not buy yet. Although the ?irrational exuberance? premium has come off the top prices are only still as high as they are because of lack of transactions and the last of the bulls are being caught up in property. Plus the net savers who are buying cash for a property because they have failed to factor in capital depreciation.

The cruelest scheme of all are these share-equity homes. It?s a pretty evil plan to artificially keep prices high. Originally designed for key-workers they are now on offer to anyone because key workers can?t afford them even on the scheme. The rules are heavily sacked against the poor buyer. If you own 40% and house prices drop 40% its all your money that gets wiped out. The provider does not take a hit. It?s a low risk way for them to rent properties that they cannot sell normally. However, we are going to see a lot more of those schemes as every last penny is sucked from the gullible.

The reason I say 50% falls from peak ending in 2011/2012 is based on a large number of factors returning to their long run equilibrium. These include: National saving ratio, multiples, broad money supply. Also looking at previous market corrections.

We have not even seen the unwinding of the buy to let market yet, and we are only a very short way into a recession. It is inconceivable that with the economy in a monster deficit and unemployment increasing steadily that we will see price inflation any time soon. Its only because the government has held interest rate down to such an artificially low level that we have not seen more carnage.

We all know that there is real demand from business for credit. But there is very little credit. If the free market was setting interest rates they would be north of 8% at least. But the government is more than happy to fix the market because politically it suits them to screw savers to transfer the wealth to the feckless.

Houses should be worth 3x the income of the profile of a typical person living there. So let?s assume your niece is a young single professional earning say ?25,000. The typical profile for that person might be a 1 bed flat in FH, that would seem reasonable. So I would argue when she can buy a nice 1 bed flat in FH for ?75k to ?80 the prices are about right. I expect that will not be the case for a couple of years yet.

She will certainly be offered loads of schemes of one sort or another, it is important she resists these, and remember they are only on offer because the provider cannot sell them normally.

She might also find this site useful: http://www.housepricecrash.co.uk