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I haven’t just pulled this assumption out of the sky either. I read a substantial amount of financial information and this seems to be the view of many economists. The latest person to talk about this is David Miles, Morgan Stanley’s chief UK economist and former adviser to the Treasury. He reported that “a sharp fall in real house prices is likely at some point in the relatively near future.”

No one is sure when this slump will take place but David Miles believes it will be sooner rather than later.

I believe that if everyone is talking about something then don’t touch it! What I mean by this is that every man and his dog are talking about buying houses, so to me that means stay away. Not only this, but the US housing market is in a bad way and history has shown us that our economy tends to almost mirror that of America.

Don’t just take my word for it, even the Financial Services Authority has warned banks to plan for a potential 40% drop in house prices. Lenders have been too relaxed on their lending criteria and things seem to be getting out of hand. They seem to have become very complacent with the fact that house prices continue to rise, but have given little consideration to what would happen if prices fall.

For now I will continue to remain on the sidelines when it comes to housing. If you’re really keen on getting your money into property then maybe you should take a look at Japan. The Japanese hosing market has fallen so sharply that housing has become dirt cheap!

James Alliss.