Will house prices fall off a cliff? Will first-timers rejoice in the rubble?

The most recent surveys could finally be proof of what homeowners have been dreading and first-time buyers praying for.

Both the Halifax bank and the Royal Institution of Chartered Surveyors say house prices are falling – not by much but falling all the same. Meanwhile, Nationwide building society says prices rose slightly last month but well below the trend of recent months. What's more, surveyors report fewer enquiries from potential buyers, and mortgage firms are seeing fewer applications from new purchasers in the wake of the Northern Rock crisis. The signs are that the UK housing market – after years of spectacular growth – is finally on the turn.

The doomsayers are adamant. Jonathan Davis at website Housepricecrash says: "Any monthly rises still continuing are misleading, as they are largely derived from independent bubbles that distort the figures."

In particular, he points to property prices in Northern Ireland, which he believes have distorted the overall UK statistics. Partly thanks to the peace dividend, average prices in the province have risen by an unprecedented 42.6 per cent in the past year, according to Nationwide. This boom has been especially stark in Belfast, where increases over the past year stand at 50 per cent, taking the price of the average property in the city to a whopping £312,637.

Mr Davis's prediction for the UK is bleak: a fall of 30 to 40 per cent over the next four to six years. He adds that while the recent credit crunch may yield one more rate cut, the cost of borrowing will be higher than it is now by 2009. This combination, he believes, could lead to up to a million homes being repossessed.

But such doom and gloom is out of kilter with the views of other industry observers. "We are certainly undergoing a big slowdown in the housing market and prices are flatlining, but you need to get beyond national prices to obtain an accurate picture," says Ray Boulger at mortgage broker John Charcol. "While some areas will see falls of 5 per cent, others will continue to rise by 10 per cent."

Martin Ellis, chief economist at the Halifax, says: "The UK economy is in a strong position. Sound market fundamentals, including high levels of employment and a shortage of properties available for sale, will continue to support house prices."

By contrast, Mr Davis claims that after more than 10 years of buoyancy, the economy is now standing on a precipice. "The only reason a market crash is not already well under way is that the Bank of England irresponsibly reduced interest rates by a quarter point to 4.5 per cent back in August 2005. And so, despite five rises since, positive sentiment has continued."

But for each overstretched homeowner, there are surely several more first-time buyers raring to seize the day when they are able to get on the first rung of the ladder. James Cotton, mortgage manager at broker London & Country, says of the slowdown: "It could mean first-timers get a breather during which they have time to put a deposit together. This has not been the case to date as house prices have been increasing faster than buyers are able to save. Flattening prices may also result in a switch to a buyers' market where first-timers have room to negotiate on price."

But the kind of decline forecast by Mr Davis is what it would take to make a real difference, says Helen Adams at the website First- RungNow. "A price drop of at least 20 per cent would be needed before any critical mass could be gained. And remember that while cheaper property would make houses and flats more affordable to first-time buyers, landlord-investors would also enter the market. I don't think property prices would stay low for very long even if there was a significant price drop."

But Mr Davis says some 250,000 landlords will have had their homes repossessed by 2009 anyway. "Be warned – the next few years are not going to be pretty."

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