HOUSING MARKET GLOOM

However Karen Ward, author of the HSBC report, fears a big exodus from Buy-To-Let and repossessions among landlords could trigger a sharp slowdown in construction and consumer spending, "causing growth to fall to its lowest level in a decade".

But Paragon, the specialist buy-to-let lender whose own prospects are threatened by the credit crunch, claims rents are still rising - averaging £11,066 in October, 10.2% up on a year ago.

Says Paragon's John Heron: "There is solid and growing demand for decent, affordable rented homes in all areas, providing landlords purchase property that meets tenants' needs and expectations."

The strength of the HSBC case might hinge on whether most landlords are in for a quick killing - or the long-haul as an alternative pension.

Most official predictions for 2008 house price still range between 0% by December 2008 (Nationwide) and small rises of 5%.

And those close to the market certainly do not see disaster ahead.

:: Yolande Barnes, Residential Director at estate agents Savills: "Many people, including eminent economists, still look at house prices primarily in relation to earnings, which has become a crude and old-fashioned method of measuring affordability.

"People assume that if prices peaked at a certain multiple of income several years ago, they should do so again.

"But there is a great deal more equity used in many purchases today, and there is fundamental under-supply in the market. 1989 is not an accurate precedent - because then interest rates almost doubled overnight".

Ms Barnes thinks falls of 10%-plus across the board would require base rate rises topping 8% - and actual falls in household income.

:: Graham Gould at Residential Property Investment Management, which buys in London for institutions and individuals: "Bank economists and analysts are not good at predicting house prices. Most lack understanding of the market.

"I don't doubt some new developments in town and city centres have seen 20%-30% falls, partly because discounts are offered on highly inflated prices. Another problem on some new developments is that owner-occupiers don't want to live there.

"On quality property in good locations, I see little or no price growth for some time to come, but prices can't rise for ever. Only forced sellers will take £160,000 if their neighbour got £200,000."

:: Stephen Brazier, chief executive of Argyll Homes, based in Beaconsfield, Bucks, and building in Southern England at an average price of £400,000: "The market slowed earlier than expected, which has brought out firesale investor types waving cash for homes to around £200,000.

"Wherever they build, builders must focus on what is in short supply. In Amersham, Bucks, there are not enough good quality apartments for 50-plussers when children have left home.

"Elsewhere, the shortage is usually of family homes - because Government policy creates so many high-rise flats in urban centres."

:: Lee Grandin at Landlord Mortgages: "It's manic, because many traditional lenders in Buy-to-Let have pulled out. Landlords are remortgaging into a Woolwich tracker at 0.69% over Base Rate (currently 6.44%) with no redemption charges, no legal fees, no broker fees and only a £295 arrangement fee.

"I think experienced landlords are remortgaging to 75% of current value - to release cash in 2008 to grab bargains off distressed sellers."

Lee Grandin warns "novice landlords" who recently took on sub-prime mortgages face huge problems in 2008 when discounted rate loans expire.

"They will struggle to get funding elsewhere, and could find themselves paying an extra 3% on their mortgage."

Grandin says the danger is serious because professional landlords turned much more selective after December 2005; many entering the sector since then are novices, and some of their properties could end up in auction rooms.

:: Jonathan Haward, managing director of County Homesearch Company, which finds properties for affluent buyers too busy to look for themselves: "I expect moderate price growth in 2008, with UK house prices increasing 1.5% by June, and up 3.5% by the end of the year."

Haward claims that more than 30% of agreed sales fall through short of exchange - which is one reason for employers firms like his.

He thinks that "generic period village properties", like Georgian rectories and old longhouses will remain in very short supply.

Regions set to outperform, it thinks, include Cardiganshire, West Wales; Tynemouth, Tyne and Wear in the North-East and homes near Midland Mainline stations well-positioned for the First Capital Connect service linking with Eurostar at St Pancras.

Home-owners fearful of what lies in store in 2008 might care to recall the front cover of The Economist magazine dated June 18, 2005, its cover proclaiming: "House Prices: After the Fall".

Some 130 weeks on, the esteemed journal is still waiting to justify its grim warning then: "The bigger the boom, the bigger the eventual bust".

:: INFORMATION: Landlord Mortgages (0800 917 3324); Argyll Homes (01494 739 400); County Homesearch Company (01872 223 349).

:: FLATS ACCOUNT FOR MORE THAN HALF NEW HOMES

Although many urban centres could be facing an over-supply of flats, builders are still churning them out in record numbers, says the National House-Building Council (NHBC).

In the third quarter of the year, says NHBC, flats and maisonettes accounted for 51% of new homes started in England - almost double the number (28%) of semi-detached and detached houses started.

In Wales, flats soared from 34% of starts in the second quarter to 46% in the third.

Only in Scotland is the gusher of flats apparently under control - accounting for 37% of starts, against 39% for detached houses.

But Government demands to step up the output of new homes may be paying dividends.

NHBC figures show builders applied to start 50,250 new homes in the third quarter - a 21% rise on 2006. Private sector starts are up by 16%, while housing association starts are up by 49%.

Finding buyers for all those flats in 2008, however, could be a problem if investors sit on the sidelines.

Average number of new homes sold each day in the third quarter was 525, down 5% on 2006 (551).

:: PROPERTY CLUB LAUNCHES SECOND BIG SCHEME

A rare property success story in 2007 is the Rocksure Property Alpha Fund - which invited 36 investors to put in £159,000 each to buy five houses and one apartment in some of the best addresses in the world.

They include Marrakech, Morocco; Breckenridge, Colorado; Phuket, Thailand; Buzios, Brazil and Algarve, Portugal, all with four or five bedrooms.

The purchase of a two double bedroomed apartment with rooftop swimming pool in Columbus Circle, 300 yards from Central Park, Manhattan should be completed in 2008.

The properties cost a total of £5 million, with the rest absorbed by fees and paperwork.

Each owner gets a guaranteed four weeks a year use of the properties, for an annual service charge of £1,500 in 2007/8. Owners buy additional Rocksure points to get extra weeks of use.

In eight years time, the portfolio will be sold and money returned to investors.

Says David Rogers: "There should be a good chunk of capital appreciation. We understand Brazil prices are already up by 20% in six months.

"Over the six destinations, we expect respectable rises in value for each of the properties. Some investors say, if they get their money back, they will be delighted to holiday with friends in exotic locations."

Rocksure is run by two former executives of the travel firm Abercrombie & Kent, Desmond Patrick-Smith and David Rose.

Cannily, they kept marketing costs to a minimum by buying addresses from a rich list, and referring interested buyers to estate agents Strutt and Parker.

Now Rocksure has launched a second fund, code name Bravo. Buyers must find £189,000, plus a service charge starting at £1,800 a year.

Says David Rose: "Many people like the idea of a top quality holiday home - but not the management problems and eventual resale. We look after both those items."

Buyers so far include partners from London law and accountancy firms, chief executives and finance directors.

As the properties are held by a Cayman Islands company, there might be scope for useful tax planning. Any owners unlucky enough to die during their period of ownership might have discovered a canny way of reducing their estate.

:: INFORMATION: Rocksure Property Funds (01993 823 809 and www.rocksureproperty.com).