For the last ten years, residential property in the UK and much of the rest of the World has been a one way bet; the ones who missed out were those who did not borrow as much as they possible could.  Those who felt uncomfortable with being in debt or who kept betting on a drop in price missed out.  The question for many is whether this is likely to be the story of the next ten years.

If the doomsayers are right and we find ourselves replaying the ‘crash’ of the early nineties, what will this mean to the average home owner?  Officially, prices fell then by about ten per cent, stalled for a couple of years and rocketed off in about 1996.  Of course, the pain of a fall in values will not be evenly distributed.  Those who have to sell will find themselves disadvantaged, although we are much more accustomed to the idea of letting our property now than we were back then.

For anyone who bought, say, a couple of years ago or who does not need or want to sell, will they really notice?  So long as they can afford their mortgage and, with rates looking more likely to fall than rise, affordability is hardly an issue compared with ten years ago, owners can sit tight and let things blow over.  The real losers back in the early nineties were those who sold even though they expected to be homeowners in future.  They found themselves buying into a rising market having lost ground.

Homes also provide shelter, it is not as if we can do without one.  People will not all sell out to hold cash and this provides some underpinning for the market.  As with most assets, it is not market timing but time in the market that delivers the return.  For every ‘clever’ investor who sells out at the top and picks up a bargain, there may be many tales of heartbreak.