Consider the law of gravity and the outlook is not as rosy as some say

The problems the market is facing are part of a global phenomenon so there is a large degree to which your hands are tied. To think otherwise is folly

I’ve lost count how many times I have heard people say: "This downturn is different from the one in the 1990s". The economy is now described as fundamentally strong, with high employment, low interest rates and demand for property exceeding supply.

Points such as these tend to be trotted out by people who have a vested interest in the strength of the housing market.

Fundamentals

Firstly, the market is never different. It is cyclical and what goes up must come down.

There is no such thing as a new paradigm when it comes to investing. Look at the dotcom phenomenon. The truth is that the economy is very weak and the fundamentals have been precarious for years.

The last house price crash was apparently caused by high unemployment. Look at the history - it was in fact the other way around.

And, yes, interest rates are low but mortgage rates of 6.5% are actually more expensive than during the last crash, due to the number of borrowers and the massive levels of unsecured borrowing, compared to that of the 1990s.

The costs of servicing debt are astronomical compared with nearly two decades ago.

Then there’s the claim that there’s more demand for property than there is supply. But prices are crashing, so where’s the demand? We forecast a fall of up to 40%, on average, from last summer, to around 2012/2013, because every region in the UK has experienced unrealistic and thus unsustainable pricing.

Serious analysis

Property has risen exceptionally well for many homeowners but they have been lucky. There was no profit based on serious analysis of the underlying issues in the market. Those who, in the past few years, bought, traded up, invested or remortgaged beyond their means, are likely to be worst affected in terms of their finances - possibly in an irreversible way.

Market forces

Foxtons founder Jon Hunt saw the cyclical nature of the market, as did the sellers of

Rightmove and Countrywide So did financier George Soros, to name a few top investors with the same insight.

Arguably, many people within the financial community knew a market downturn was imminent and encouraged it further, to exploit the outcome.

The reality is that we are only just entering into a recession - property prices increase when the economy is coming out recession, not when it is going into one - so we have a long time to wait for a recovery.

And let us not forget that the crash is global.

California entered into recession first. It has had its crash for more than two years and it shows no signs of abating, so why should the

UK be any different? Our economy is as weak, if not weaker. California is the most productive state in the

US, with Hollywood, Silicon Valley and Boeing to boast of.

Globally, the banks have lost $250bn (£127.6bn) so far, which means they are going to have to rein in their lending by $2.5 trillion (£127.6 trillion).

They haven’t even come close to doing that yet and, don’t forget, they are still expected to report further writedowns in their secondquarter results.

We may see some improvement in the housing market in 2010/2011 in London and the South East but even then, the uplift will take time to filter through to the rest of the UK.

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