While demand for housing in the past few months has dropped considerably the shortage of housing in many regions in of the UK is likely to help prevent house prices from crashing.

The shortage in housing provides a certain level of offsetting support to prices despite the fall in demand from buyers, this is particularly the case in the south of the UK.

Rising interest rates in the past year considerably impacted on affordability issues with the rising price of houses. In 11 out of the past 12 years rises in house prices have outstripped rises in income. Now for the first time in 12 years, prices have dropped.

For affordability to return to a more normal level one of two things needs to happen, income growth needs to be higher than house price growth for the next couple of years and more home loans need to become available.

Whilst interest rates have dropped from their peak last autumn, inter-bank lending for loans and mortgages is still at a high rate. This has affected the number of loan products on the market and the amount of money available for banks to lend.

In order for house price growth to come back in any substantial way the only real option is for income growth to outpace house price growth.

The buy-to-let market is expected to take the biggest hit from changes in the property environment. It is expected that buy-to-let investors with short time horizons are going to flood the house market with their properties as they try and raise liquidity for investment back into the stock market where returns are expected to be greater than in the housing market.