British people will pay what they can borrow, any notion of worth is secondary

That's the same thing. Worth = what people are prepared to pay. Simples. If they can borrow it then they'll pay it, and it'll be worth it by definition. You seem to be holding onto a concept of intrinsic value that's pretty meaningless.

That's the same thing. Worth = what people are prepared to pay. Simples. If they can borrow it then they'll pay it, and it'll be worth it by definition. You seem to be holding onto a concept of intrinsic value that's pretty meaningless.

So the fact that banks won't lend what they did, means houses are worth less?

I think you have to get around the fact that the housing market is not that simple.
People will buy what they can borrow. And people naturally do their homework and make a best judgement on what a house is truly worth when it comes to buy.
And there is some truth in that when banks don't lend houses are worth less. Unless we're all cash buyers.
It comes around to simple economics of supply and demand. When banks don't lend (easily) – demand is lowered. But the current lack of supply means the price of houses is being kept on a high.

"the current lack of supply means the price of houses is being kept on a high"

Bingo.

If you look on Rightmove there are plenty of houses that have been on the market for quite some time, lots for 12+ months. So if there is such high demand why haven't they sold? Maybe because their price is too high? But if the demand is so high, they can justify a high price right? Or maybe the supply demand argument isn't necessarily correct? 😀

Maybe the recent increase in house prices is a statistical anomaly? The proportion of buyers in the market has reduced significantly since the onset of the credit crunch, hence a larger proportion of transactions are made 'further up' the market and this has the effect of skewing house prices upwards. Most of the media just spout out the headline figures and don't delve into the fine details of how these figures are calculated.

As always, all IMHO. 😀

daves mum – this skewing effect of yours is the first I've heard. Unless the people "further up" the market are buying and selling amongst themselves it cannot be true. So definitely only in your (humble) opinion.
As previously stated the housing market is not that simple. The houses that are selling (and fast) are good quality homes in prime locations. And for sure there are plenty of houses priced up incorrectly that seem to be sticking but their eventual sale prices will still be "up" on their previous year's value.

3 years ago I was looking at buying a flat in Hampton – GBP270k. I were able to get a mortgage no problem. But it was cheaper to rent so this I did.
Now the flat is back on the market – GBP165k. Any viewings? Still pretty much none.
I'm glad the market has corrected itself but the prices in many places are still far too high. Not all of them but some.
BTW My boss has a building company, they do mostly supermarkets, shopping centres, large developments. 3 years ago some of his staff were on 2-3k Euro per week, now most struggle to get 350 Euro weekly. House prices – 50 per cent down in 18 months (that's in Skerries). Rent – 30 per cent down in a year (Drogheda). If it carries on like that I'll exchange my Heckler for a house in a couple of years 😉

The reason houses have been sticking on the market is down to the price the seller is willing to accept. A lot of people seem to believe that their house is an exception to the pricing movements over the last couple of years, so is still worth the same as it was at the peak of the market. Whilst prices are heading back up again, I don't think they have anywhere like the value they did back in the summer of 2007 as yet. As a result people can buy either a similar house for less, or a better house for the same (this is what we did – the house we wanted about a year ago at the bottom of the market was overpriced and they would not accept the market trends based offer that we made. Another, better, house came up during this negotiation that we then bought for £20k less than they wanted. Their house is still on the market and I laugh every time I walk past it!)

Coincidentally I'm heading to Skerries with the kids today.

On a more serious note, the housing market in the Free State was being manipulated, as it was here in the 6 counties. Builders were buying land banks and just sitting on them to create artificial shortages. Another trick was building a development and only releasing a few houses to again create an artificial shortage.

There are three large 5 bedroom detached houses directly opposite me. All lying empty because the builder is asking for too much. However, he bought the site at a premuium and it looks like if he sells at all it will be at a significant loss.

Seems to me there is now a massive oversupply. In addition, many migrant workers are leaving the sinking ship, leaving many with empty investment properties.

I think property prices have further to fall. I bought my house in 2001 and I expect its value to drop below the price I paid at that stage.

Ireland has been hit one of the worst in the recession. The fall in house prices over there doesn't surprise me.
Flats have been hit bad. This type of housing is in abundance and some fell to half their peak value.
The area I am looking to buy in is now within 10% or so of its peak 2007 values.