A rapid fall in house prices will minimise the pain

If the recent rates of house price falls are sustained, it is plausible that the 35% peak-to-trough decline that we expect will have been delivered by autumn 2009. The sheer speed of adjustment is causing alarm. However, we suspect that the great speed is a good thing. While a period of falling house prices will inevitably be painful, we believe that the quicker house prices return to fair value, the less damage the housing market correction will do to the wider economy.