UK House Prices to fall in 2008?

Interesting article in the New Statesman, written by housepricecrash.co.uk spokesman Jonathan Davis; - House prices set to Tumble

Basically, the article argues that house prices are set to collapse. The arguments for this collapse in house prices are:

• House prices increased faster than incomes and inflation. They have increased by more than the long run trend rate
• Interest rates have increased 5 times since August last year and 9 times since 2003
• A significant part of the house price increase is due to buy to let speculation. Therefore, as the market turns, many of these buy to let investors will look to offload onto other buy to let investors. Jonathan suggests this is a classic example of the Greater Fool Theory of Investing - “where the buyer believes there will always be an even more stupid person around the corner.”
• Global Credit crunch leading to shortage of funds for lending. (Note yesterday saw a particularly bad day for the stock market, with the FTSE-100 falling 170 points on fears of further credit shortages.) see stock market falls in independent.
• Increased number of home repossessions - forecast between 44,000 and 55,000
• High levels of personal debt and low savings ratio (under 6%)
• UK may follow US house prices downward.
• See also: why house prices are set to fall

Interesting Article, but, some cautionary notes

• People have been predicting house price falls since 2002, since then house prices have nearly doubled. Maybe one year of predicting house price falls, they will have to be right
• There has been increased demand for renting due to uncertainty of house prices. This may bolster the buy to let sector.
• Most UK homeowners don’t buy out of speculation, they buy to live. Buying and selling houses, is not like selling shares. It is time consuming and expensive. Most buy to let investors are in in for the long term.
• Why house prices may never fall