If there are no more shocks to the property market, there is only a very small chance of property prices dropping. The Royal Institute of Surveyors claims there is a 10% chance, but we believe this is too high and that it is more like 2-5%.

The reason is that home owners tend to see their property price at an emotional level and this makes property prices "sticky downwards" in that they take a long time to start declining as people hold on tight.   It is often forgotten that the annual price increase of property, even though it is slowing, is still running at 9% per annum in September this year – according to Nationwide, so pricing has a way to slow before it becomes negative.

The Northern Rock shock has created an air of nervousness, so buyers are staying off the streets.  The best evidence of this is that the homebuilders Barratt indicated sales dropped 10% in the weeks following the Northern Rock announcement.  But, as humans we have short memories and if the Bank of England drops rates and we continue to see a decline in new properties coming on to the market because of the barriers being created by the introduction of HIPs, there will a lack of supply which will act to drive prices upwards, countering the price softening pressure caused by market nervousness.

Therefore, at the moment we predict that we will see a slow down in the number of property transactions over the next 6-10 weeks – so a quick sale through an estate agent is unlikely! - but we see no immediate signs of a price crash.

In the medium to long term, with banks now indicating borrowing will become more expensive for mortgagees with debt, or those seen as riskier, people in this situation need to weigh up carefully whether to re-mortgage their property, or whether to go for a quick house sale, using a property buyer.  For some people, selling at a discount and clearing their debts will be better than suffering a repossession and all the issues this can cause for a person for the next few years.