We've been waiting for this for a long time.
Since last summer, house prices have soared especially in London. Indeed, in the part of southeast London where I live, they have gone up by a nearly a third in one year not great news when you're looking to buy a flat.
Of course, what comes up has to eventually come down.
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And now it finally looks as though the bubble is bursting.
This survey is the one to watch to see where the market is going
The housing market has remained stubbornly strong in the face of many hurdles this year.
In spring, new rules on mortgage lending looked as though they might push prices down. And at one point, the Bank of England seemed ready to step in and force the government to cut back the idiotic Help to Buy' scheme.
Despite this, it was not until a few weeks ago that the first real signs of a peaking market started to emerge from survey data. And it's only now that we're seeing solid evidence that both London and national prices are actually starting to fall.
As we've pointed out before, Hometrack's house price index is the one to watch if you want to see where the market is going. Unlike most of the others, it's based on a survey of estate agents and surveyors, rather than mortgage or sale data.
While this might make it a bit less accurate, it provides a snapshot of the market at a much earlier stage than the other indices. And lately it's been one of the most bearish.
In August it reckoned that London prices were flat for the first time since early 2012. And now it reckons that prices are starting to fall down 0.1% in September.
That may not sound like much, but demand is also falling sharply. Hometrack reckons the number of new buyers in London fell by 3.4% last month, while the average percentage of asking price' achieved fell again to 96.2%, another sign of a slowdown.
Meanwhile, UK-wide prices were also flat last month. Hometrack research director Richard Donnell warns that "increased buyer uncertainty" and "tougher mortgage affordability checks and limits on high loan to income lending" are hitting the "higher-value postcodes of inner London". He expects activity to "drop off in the coming months".
Hometrack is no longer the only one giving bearish readings. The Nationwide house price index based on nearly a third of mortgages written in the UK said that national prices fell by 0.2% in September. That was the first fall in 17 months since spring 2013.
The drop wasn't UK-wide. Nationwide's quarterly data suggests that London prices still rose. But annual price growth slipped from 26% to 21%. According to chief economist Robert Gardner, there are "tentative signs from surveyors and estate agents that buyer demand may be starting to moderate". As a result, "price growth may soften further in the final quarter of the year".
As Capital Economics puts it, we're seeing a "sharp reduction in the mismatch between active demand and supply". In short, "it is no longer a seller's market".
Mark Carney gets more powers to push down prices
Meanwhile, the Bank of England looks set to get more powers to keep the market in check. The Bank has concluded that the Help to Buy scheme which effectively has taxpayers guaranteeing mortgages can stay.
But the Bank is expected to formally request, and be granted, increased powers over mortgage lenders. This will allow it to impose further limits directly, without the approval of the chancellor.
It also looks as though there may be a major crackdown on buy-to-let (BTL) borrowing. Previously, both the Bank and the Financial Conduct Authority (FCA) have deliberately exempted BTL from certain lending restrictions. This is because BTL investors rely on the rents from their property, rather than their normal income, to meet mortgage payments.
However, there are growing worries that a slide in prices, combined with a rise in the bank rate, could leave many investors and lenders exposed. There is also anger that BTL investors are making it much harder for people to get on the property ladder.
Already, Brussels is putting pressure on the FCA to regulate accidental' BTL landlords those renting out property they have inherited, or simply can't sell. In addition, BTL investors will be included in any new limits that the BoE may impose.
Finally, the increased talk of a mansion' tax on properties over £2m (depending on who wins the next election) is also having an effect on the higher end of the market, especially in London. It will certainly help moderate prices by making it less attractive to overseas investors, who have played a large part in creating the bubble.
We'll have a lot more on the UK housing market in our property roundtable issue next month. We'll be talking to our experts about the impact of the mansion tax, whether there's anywhere worth investing in, and what they expect to happen to prices from here. If you're not already a subscriber, get your first fourissues free here.
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