HOUSING MARKET DRIFTING INTO CRISIS?

"By cutting the supply of homes for sale by 30%, the Government might have avoided calamity for the time being. If agents were flooded with new instructions, from investors getting out of the market, or rising levels of repossessions, price falls might be greater than the 2-3% falls seen so far."

These are the experts warning of falling prices:

:: Rightmove: recording a 0.1% fall in October, the first for two years, director of research Richard Donnell says that "small price falls in the months ahead are likely to remain limited as there remains no evidence of any increase in the supply of homes for sale.

"The decline in the number of homes coming to the market is likely to support underlying prices in the coming months".

Rightmove thinks areas which have seen the largest increases in the last couple of years - Central London and City, Hampshire, Cambridgeshire, Oxfordshire - are most vulnerable to falls.

:: Smart New Homes: new home prices have been falling for three months, with incentives and discounts being stepped up for apartments now accounting for a staggering 57% of the new homes sales.

However Smart New Homes says the fall over three months is only 1.2%, and over 12 months, prices are actually still ahead by 0.5%. Biggest falls in new home prices are in Yorkshire and Humberside (-5.8%); Greater London 9-2.7%); and North-West/South-East (both -1.2%) with rises in South West (4%) and Wales (3%).

:: Assetz: the leading property investment company says the price of an average property around £210,000 is falling in value by about £1,000 per month - but over the last year, it has still jumped £18,000 from £194,000.

Says Stuart Law, Assetz chief executive: "With many developers and vendors keen to shift units during the currently unsettled period, investors can capitalise on excellent discounts, and when base rates do start to drop, there will be a lot of very happy buy-to-let investors."

Law claims there is "no immediate cause for alarm.

"I would anticipate a return to monthly house price growth to be reported in next month's index."

:: Home Builders Federation (HBF): its October Housing Market Report (HMR) says new home site visitors and reservations levels in September were way down on September 2006, with investor demand falling sharpest of all.

Builders are stepping up their use of sales incentives - and a quarter of builders expect house prices to fall over the coming year. Many are "noticeably more concerned" about mortgage rate rises during 2007.

However, "down valuations" - surveyors putting a lower figure on properties than builders seek - are described as "only a minor concern."

The HMR acknowledges that estate agents confirm "a very sharp fall" in new buyer enquiries during September, and also the fourth monthly decline in new instructions. There are also signs builders are cutting back on starts, to reduce the risks of being left with completed stock standing unsold before the market picks up.

However, Stuart Law at Assetz is standing by his advice to investors to be bold - and to see current market uncertainties and fears of trouble ahead as something of a buying opportunity.

"We think the drop in prices is a bit of a glitch," he says, "and remain confident of overall price rises of 5% in 2008, after 8% in 2007. We are now getting distressed sellers and firm rents. There are so few buyers and sellers, that only people who have to sell for various reasons try to do so.

"That means some silly offers are occasionally accepted.

"I offered £210,000 for a student house priced at £275,000, producing a high yield in Manchester, and it was accepted. With deals like that, you don't worry about prices falling 5-10%, so long as rents hold firm."

:: ESTATE AGENTS OFFER BETTER SERVICE - SHOCK CLAIM

Only a tiny percentage of house sales trigger complaints about estate agents - who have managed to improve service standard despite the introduction of HIPs on larger homes this year.

That's the surprise claim of a website launched in January - by the Register of Estate Agents, which lists more than 7,500 individual agents as well as more than 1,000 firms.

The site invites fee-paying clients of member firms to comment online on their experiences - and it is from these that the site concludes most clients are pretty satisfied.

The finding will amaze consumer organisations - and probably also the Ombudsman for Estate Agents, who has admitted he received a record number of complaints about estate agents in 2006.

But Henry Pryor, the property computer wizard who created the website, sees no contradiction.

"I don't dispute the Ombudsman has received more enquiries," he says, "but there has been a huge increase in the number of member agents. Pro rata, I believe the level of complaints has actually fallen.

"Secondly, latest Land Registry figures reveal a plunge in purchases up to £250,000 in May-June-July, by as much as 33% in July against July 2006. This first time buyer sector of the market has less experience of the housebuying process and usually generates many of the complaints.

"As first time buyers vanished from the market - well before, incidentally, the arrival of HIPs on four bedroomed homes on August 1 - it is possible that many potential complaints about agents went with them."

Given all the other distractions in 2007, Pryor thinks agents deserve a pat on the back.

"Despite having to deal with the introduction of HIPs, educating the public about what they mean and why they need one as well as coping with one of the frothiest markets ever, agents are concentrating on detail and providing high levels of service," he says.

:: REGIONS COULD FACE SEVERE SHORTAGE OF FAMILY HOMES

The Government's policy of cramming as many flats as possible into high-rise developments on urban "brownland" - which has been built on before - could trigger an acute shortage of family housing, according to two reports from leading agents.

Both reports - from agents Knight Frank on the M40/M5 corridors covering Birmingham, Oxford, and Milton Keynes, and Savills on South-West England say there has been a huge focus on flats in urban areas.

Knight Frank says that 72% of new homes built in Birmingham in 2006/7 were flats - against a low of 26% in 1997/8. Yet in the three years to March 31, 2007, Birmingham flats rose in value by only 6% - against 24% for terraced homes and 39% for detached homes.

Knight Frank says many families want to live closer to the town centre than suburbs such as Moseley and Harborne - but they can only do so with "the correct phasing of transport, healthcare and schooling, because these amenities act as a honeypot for prospective family purchasers."

By contrast, if rented flats start to dominate inner urban areas, "there will be a real risk of oversupply leading to falling values and investors will look elsewhere."

Knight Frank says the average build cost of a 600 sq ft apartment within a four storey scheme is £85,000-£90,000 - against £90,000-£95,000 for an average 950 sq ft townhouse.

In its survey of South-West England, Savills says the market has shifted strongly towards two bedroomed flats which now account for 72% of all new homes under construction. In Central Bristol, there has been a 23% shift towards more two bedroomed flats.

:: HOW LANDLORDS STAY AHEAD OF GAME

With any strong uplift in rents unlikely when so many household budgets face acute strain, landlords must do their homework carefully if bricks and mortar isn't to lead them into financial difficulties.

That's the view of Neville Page, marketing director at Chesterton Global, who says these are key points to check out to maximise your returns:

:: What type of landlord are you - do you want to be hands on, or allow your flat to hum away with minimum impact on your lives? A letting agent's management service can be worth its weight in gold, for tenants who might otherwise find themselves paying heavily for repairs.

:: Research before you buy: if you are purchasing in a thriving city centre, a slick one-bedroomed apartment might be perfect for a young professional, while a quality home near a good school is perfect for the family market.

Remember also that if you intend to create an HMO (House in Multiple Occupation), you will need to get a licence from the local council.

:: Do the maths: factor in utility bills, mortgage repayments, accountants fees, service charges, management fees and maintenance costs before you agree to buy. If we are going into a period of static property prices, these extras could tip your investment into the red.

:: Stand out from the crowd: landlords might really have to promote their property to achieve maximum occupancy.

:: Consider the eventual resale carefully: before you convert a large house into bedsits, stop and consider likely resale values - and try to devise a conversion which means the property could eventually resell to investors and owner occupiers alike.

:: INFORMATION: Chesterton Global is on 020 7298 5611.

:: BUYING A RARE SLICE OF FLORENTINE HISTORY

The location is one of the most famous bridges in the world: the famous Ponte Vecchio across the River Arno in the heart of Florence, little changed since the days of the Medicis.

It's a perfect location, but not necessarily a quiet one. A three bedroomed apartment on the fourth floor which retains many original features has a price tag of £1.1 million.

The master bedroom off the main living area has a floor level noticeably higher than the rest of the house, because the secret passage of the Vasarian Corridor lies directly underneath.

This was the passage which enabled British troops to take the Germans by surprise in August 1944.

The bathroom has mosaic walls, while a red brick staircase leads to the upper level, with private balcony.

The agency is Precious Villas, which offers a selection of "high end properties for a sophisticated clientele" from £400,000 to over £30 million.

:: INFORMATION: Precious Villas (0870 899 8023).