Will house prices rise or fall?

The reality is that the market is driven by demand and supply. Only 6 months ago the government were telling us there was a shortage of housing in the South East and we needed to build more. This demand has not gone away. There is still a massive shortage of housing in the south east. No doubt demand has waned but everyone still needs somewhere to live. My prediction is that the house price crash will be short and sharp. We will see 20-30% falls from the peak in 2007. We have already seen 20% falls in most areas and up to 50% in some northern city centres. Therefore we only have about 10% further to go. The recovery will be led by London from the middle of next year when the mortgage market eases up. There will still be a dearth of first time buyers but they will be replaced by cash rich investors picking up properties at the bottom of the cycle.