homealone

I don't think the housing market will crash - at least not in the same way it did in the late 80's / early 90's. The situation then was influenced by a change in tax legislation, which removed the 'loophole' where individuals could 'share' a mortgage, and each claim tax relief on their payments. Because there was a cut off date where this was to end, there was a huge demand for houses that sent prices soaring.

The subsequent rise in interest rates then exposed people who had over-extended themselves, coupled with a drop in prices, this left many people in the trap of 'negative equity'

A move to increase interest rates, now, to 'slow down' the market will disadvantage too many people to be practical. I believe we are very close to a natural 'barrier', where a 'normal' first time buyer cannot afford any kind of property. The scenario I see here is that prices will stabilise, or fall slightly, but not crash.