House prices fall for second straight month, Halifax reports

Clearly both lenders' conclusions are accurate as they are based on money lent, and the answer is the booming south east, where Nationwide tends to loan out more.

Here in north east Hampshire/Surrey borders, the market is booming and agents are short of stock. It's the London effect.

I am putting a property in Guildford, Surrey, on the market in July to take advantage of this while it lasts, which probably won't be for too much longer as interest rates will soon rise - Canada has already set the trend.

Next year we will be looking to buy as I think the market will be static then, even in the south east, as economic reality hits home.

If Capital Gains tax is changed upwards we may find people selling off their buy to let properties which could leave a glut of homes for sale and reduce prices.

It's interesting that when the (first) bubble burst in 2007 the Halifax index was the first to record falls (starting in August), whereas the Nationwide took two or three months to catch up with the changing trend. History seems to be repeating itself as the second 'echo' bubble bursts.

There's nothing unusual about 'echo' bubbles - they are a well-known phenomenon when a major asset price bubble deflates. After the initial price drops people understandably see a buying opportunity, leading to a temporary blip in prices, typically peaking at around half-way between the previous low point and the previous peak. It's only when the echo bubble bursts (which it always does, because economic fundamentals are so far at odds with market prices) that reality hits home and people finally lose faith in an asset class that was seen as a guaranteed road to riches.

So far the bursting of the property bubble has followed the same pattern as other historic asset bubbles, and will continue to do so until house prices have fallen below their long-term average. Forget 3.5x income, I'll be surprised if we don't see 3x or less, just like in the 1990s.

All this guff about a chronic shortage of property is just a line dreamt up by PR companies hired by property interests in early 2009. There'll be no shortage when all the second home owners are forced to sell.