dmorison - 6:58 pm on Dec 4, 2007 (gmt 0)

IMHO, the banks are 100% to blame for the rampant house price inflation the UK has seen in the last 7 years. Offering massive multiples, and even 50 year interest only 110% mortgages meant there was money in the hands of first time buyers to push up the price increases.

If the banks had stuck to their guns and would only lend 3.5 times income as it always used to be, there is no way that prices could have got out of control.

As has become obvious, they have now pushed it as far as it can go; and only 1 of 2 things will happen;

i) A crash - and if it does happen I think it will be short and sharp as a result of the way news and public opinion is influenced and disseminated these days. During the last "crash", you perhaps read a newspaper and watch the 6'o'clock news. Today, you have 24 hour news, forums such as housepricecrash.co.uk and online property search portals that RSS in scaremongering news headlines.

ii) A prolonged period of zero house price inflation. This will only happen if GB, AD and the other VI's can engineer this in the current environment (see i)