House prices are already crashing

The latest Halifax numbers showed prices falling by 0.1% in November and 2.1% in the last three months. The annual rate of price falls is now 0.7%. It is, says Martin Ellis, housing economist at the Halifax, "consistent with a relatively flat overall trend in house prices".

But let's not forget as all too many people want us to that "flat" actually means "falling" at the moment. With RPI inflation well over 4%, your house is losing value in real terms every day. Indeed, if you take inflation into account which you obviously should UK house prices are already down 20% plus on their 2007 levels.

The bulls might think house prices aren't going to crash, but on many measures they already have. And it isn't over yet.

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Ellis allows that a larger supply of houses on the market coupled with a falling number of buyers has led to the recent price falls, but he notes that as "homeowners are becoming more reluctant to put their houses on the market" further falls are unlikely.

There is a problem with this argument.

Sure, there might be fewer willing sellers around than there were; and a lot of the people who do have their houses on the market aren't really motivated sellers, and so won't ever cut their prices to the levels today's buyers will pay. But the market isn't just about willing sellers, it is about unwilling sellers too. And with unemployment quite likely to rise into next year, and with the inflation numbers suggesting that interest rates won't be able to stay ultra low for as long as the heavily-indebted might hope, their numbers may soon start to rise.

The market is also about buyers. And with mortgage approvals at historical lows and bank funding worries hitting mortgage availability, they remain very thin on the ground. Add it all up, and it sounds less like "flat" and more like "crash" to us.