What might happen to the British housing market? After a week of dire news from specialised mortgage lenders and housebuilders, this is an obvious question. It also plays directly into the darkest obsessions of the British, for whom nothing is more important than that houses become ever more ludicrously expensive.

Certainly, houses became impressively costly between the middle of 1996 and the turn of this year. Over that period, real house prices rose by close to 190 per cent, according to the Financial Times index. A trend fitted to a series on real house prices that goes back to January 1971 was 30 per cent below the peak reached at the end of last year. In the third quarter of 2007, the ratio of average earnings to house prices peaked at just under six. This was almost double the ratio at the trough of 1995 and well above the previous peak of five reached in 1989.