Hi,

I must say I believe CAW to be wrong. Even with a drop of just 10%, and taking pay rises into account, house prices are just too high to be supported by the general economy. Prices that are 5 or 6 times one's yearly salary are just an unhealthy peak that will come down (in a healthy economy these things must be balanced, otherwise they don't work). One other element is the price rises of petrol ($140 a barrell and climbing!!!) and food (up 24% in one year). These are not things to overlook. They are very steep increases which everyone is feeling and they concern issues related to food and fuel shortages that are affecting the world, let alone just Britain! I'm even wondering whether we should start being concerned about more serious problems... Anyway, historically house prices go up and down in waves which result in an average more modest increase unless there is a crisis such as a war. High house prices have been supported by a period of great wealth and relatively few problems. Things are different now and there is no point pretending they're not.

Anyway, it is in the interest of people in finance to say everything will go well, so they are not reliable sources of information. Sources must be mixed and evaluated critically.

All the best

M66