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Britain's decade-long property boom has come to an end. Repossessions are rising, transactions falling and prices, at best, are flatlining, but the underlying strength of Britain's economy will ensure that an early 1990s-style housing market collapse is not repeated, say some commentators.
Others consider the weight of burgeoning personal debt will push prices down.
British property prices fell 0.5 per cent in February, the fourth monthly decline in a row, the country's largest building society, Nationwide, said.
The average price of a British home was now GBP179,358 (HK$2.79 million), it reported.
According to the Royal Institution of Chartered Surveyors (RICS)  the downturn started last summer. Most of its members had experienced price falls for the past six months, it said. A downturn that started in parts of northern England and the Midlands earlier last year had spread to London and south-east England, making it a national decline.
The Council of Mortgage Lenders  reported that 27,000 homes were repossessed last year, the biggest number since the mid-1990s. The number of flats and houses being sold was down by a quarter compared with this time last year, it added.
RICS said sales of homes at auction were the lowest they had been for three years. Mortgage approvals were down by almost a third in January compared with the same time last year, the British Bankers Association  reported.
With the list of negative statistics growing longer, many analysts are gloomy.
'Price growth now is negligible,' said Liam Bailey,  head of residential research  at estate agency Knight Frank.  'Some places are static and in other places there are small price falls. And this has been the case for the past three or four months. The market has turned around quite dramatically from this time last year when prices were growing at 10 per cent per annum.
'But the big story, and this is the most worrying thing, is that the number of transactions is falling. It is 20 to 25 per cent down in volume terms. People are just standing on the sidelines waiting to see what will happen.'
Mr Bailey forecast that the market would remain stagnant for the remainder of the year  and then slowly recover, although not to the boom-time levels of the past decade because of affordability constraints and effects of the credit crunch.
'It is rather like 2004-05 in that growth will be down to 0 per cent, and there is no scope for double-digit growth over the next few years, because there is nothing more that can be squeezed out of the market,' he said. Some property professionals are concerned that Britain's debt problems will drive property prices further down.
The flooding of easy credit in the housing market has turned into a dribble, and many of those who took on big debts during the boom-time are finding it  tough to pay them off now.
The Bank of England  may have cut interest rates twice by a total of 0.5 per cent recently, but many mortgage lenders continue to raise rates to improve damaged profit margins.
According to a survey by  British independent regulatory body Financial Services Authority,  one-fifth of British home loan borrowers say making mortgage payments this year will be a struggle. RICS anticipates more homes will be repossessed.
Some surveyors are concerned  that a vicious circle will appear where a growth in repossessions depresses the market, resulting in more home repossessions. The lower end of the housing market was most at risk, said Robert Bryant Pearson,  chief executive  of Britain's biggest surveyor firm, Allied Surveyors.
'The 'live now, pay later' culture of remortgaging to pay off credit card debt, coupled with competition between lenders and apparently never-ending increases in house prices, was bound to mean the merry-go-round would stop sooner or later,' he said.
Economic research consultancy Capital Economics  attributes half of the 37 per cent increase in British property values over the past four years to loose mortgage lending. It forecast that today's tight credit conditions will mean two years of falling prices, down 5per cent this year  and 8 per cent next year.
Other commentators, however, are more positive.
Richard Donnell,  director of research  at housing intelligence business Hometrack,  forecast a 1per cent rise in prices by the end of the year.
'Falling interest rates will alleviate some of the affordability pressures,' he said, 'It will return to being a normal market. There are buyers out there, but people want value for money now. They won't compromise any more. The lack of supply will support prices.'
Mr Donnell said buyers' lack of confidence about prospects for the housing market meant that only 1million sales would be completed this year, but  this would not drive down prices. Repossessions and mortgage arrears were not rising at a rate that would affect the market overall, he said.
'We are reading too much into all this.  To get prices falling you have to get forced sellers. Even if 50,000 homes are repossessed, that means only 0.5 per cent of all sales are repossessions. So where is the volume of distressed sellers that is going to drive the market down 10 per cent or even 5 per cent?'
Mr Donnell said that asking prices for overpriced properties might fall to levels that more accurately reflected their true value.
'There are some big overvaluations,' he said. 'I think it is in the newbuild and buy-to-let markets where we have problems, but these are isolated and localised, they are not enough to be a drag on the market. Only 5 per cent of all sales are newbuild flats.
'We might see 10 per cent less asking prices, but that is not the same as an actual fall in value, in the sense of how a surveyor would value a property.'
Key economic influences on the market remained benign, Mr Donnell said.
Average unemployment rates were forecast  to rise from 800,000 in November last year to 900,000 by the end of this year. This would be only a small increase, and the overall level would be low historically, Mr Donnell said.
Another plus, he said, was that workers' earnings were forecast to rise 4 per cent this year.



Good times over as market shifts