Everyone who has a vested interested quotes the supply and demand argument for continued house price increases. What a load of twaddle. Supply and demand are not the driving factors in this market. If they were then Africa would be in the middle of a housing boom. Yes we have a growing population, but that doesnt mean that the price of accomodation will keep going up.

I believe that it is all about confidence. Today I am willing to buy something for £300k because everyone else is willing to pay that much and in the heat of the competition so will I. What happens when my bottle goes? It is at the point when people start to question what they are doing that the market will top and have a period of correction.

In this regard, it should be fairly obvious that the housing market is likely to be subject to a correction by the fact that it is called a market and that is what markets do.

I am quite interested in how markets work generally. I have come across a few market based games and would be keen to know of any of you might care to recommend some?

Barney

I think your right about confidence... I remember reading about how people judge an assets value in different types of market. For instance in buying clothes its obvious that something is worth however much your willing to pay to fulfill a need. In the stock markets you have no idea of the true value apart from following other peoples behavior (who is following someone else) - ie the confidence trick. Housing is somewhere in between.