Will they sell when they see that house prices are really falling? Or will they hang on tight till the bitter end?

The Latter,

In nearly all crashing markets the vast majority ride it all the way down.

Only the forced sellers set the prices along with a few wise panickers - it all happens on the margin. In a sense, these are the lucky ones.

It's a tough one.

I think that we've had enough stories of "House prices dropped last month" only to be followed the next by "House prices on the rise again" to reassure sellers. When a drop comes, they'll expect it to be short lived. The "financial experts" will probably try and say the same thing - for fear of plunging prices upsetting the economy. That will prolong the holding out even further.

Personally, I feel we should have already had the crash, but that the media representation and TV programmes like "Location, Location, Location" have given the illusion that all is well, and so people see drops one month and assume they're now getting a bargain. It's drawn the whole process out, but eventually we'll reach the limit.

Indeed. Looking at the newspapers during the last crash, there were plenty of "housing market has turned the corner" stories in 1900, then 1991, 1992.....etc.

Time to dust off this article: What the experts said last time

I was fascinated by the past media reports during the last crash! It seems the key to to whether a crash is really taking place is the degree by which bearish reports outweigh bullish ones. On that count things are moving along nicely. the last year and a half have ssen many more sceptical report writing on the housing market and one should expect this trend to continue into 2007 as new figures are released. Everyone is exposed to a wall of information and the true picture is drip fed through! As I have said elsewhere: Patience is the key. No bear market (especially one as large and manipulated as this) has gone down without a fight............I just hope these property programmes revisit some of these "success stories" in a couple of years for some real entertainment! Here in HK my landlord bought her apartment 6 years ago for 4 million HKD(approx 300,000). She could still not sell it today for more than 2.2million ( approx 150,000). The most greedy here paid the biggest price! How wonderfully re-assuring economics can be!!

Chasing the market Down- a common response

Most people do not have the gumption to cut prices sufficiently to make a sale, so the wind up cutting their prices slowly, lagging behind the falls in the market. And then near the bottom, they give up and throw in the towel. They wind up selling, just as the market is finding its bottom.

This process could last 18 months to two years, or longer if interrupted with rallies

Absolutely true, I did this myself when selling my flat. Put on the market Summer 2004 (housing peak IMHO) and it took over a year of small reductions before we got a bite.

Could take even longer than 2 years, I lived through the last one, seemed to go on forever.....5years+ until the true bottom was reached And all the talk was of negative equity. Or were you talking about equity markets Bubb? Property takes longer to sell and once all the BTLs are trying to chase the same dwindling buyers left, then the falls or repossesions will really come.

Frightening to see almost the exact same signs and comments this time around. It's bizarre to think that people only look to interest rates and ignore the bigger picture. I've spent may a fruitless hour talking with the young-uns (ok Im not actually that old ) in my office about house prices, they just don't get it!
Once sentiment turns, it doesn't matter what the interest rates are. And this is where I think we are now, sentiment is turning......

Theres no reason why theyd have to sell, Im sure theyd just keep hold of their properties, most peeps invest in property for the longterm. Who cares if there is a crash, as long as you can sell it again in the next 20-30 years. Anyone who has seen the forcasts for population rises and the poor planning for this by the government wont be too worried in the long term. tbh im not sure we'll see a crash, for that to happen something will need to force people to start selling, unless there is a massive rise in unemployment then people will just hang on to their homes - who will want to sell at a loss...