The latest RICS survey shows that confidence is faltering in the housing market and although new instructions are still rising, buyers are losing steam. This latest news does not bode well for first time buyers hoping to obtain a contractor mortgage.

Economists are comparing the current situation with that experienced in the early nineties. House prices dipped by 17% over three years, reaching their lowest point in 1992. The housing market then experienced several false starts with prices rising for a few months before dropping back again.

PricewaterhouseCoopers suggest that a solid house price revival could be a long time in coming. John Hawksworth from PwC says that house prices are still overvalued by 5 to 10% and there is a possibility of further drops as interest rates rise. In fact a report from PwC suggests that in ten years time prices might still not have reached the 2007 peak.

Whilst the majority of investment vehicles are going to suffer due to austerity measures, the residential housing market is seen as less of a risk than dealing in shares, bonds and currencies.

There are of course regional disparities. In Scotland for example, average house prices are only 1.1% lower than their 2007 peak and in central London, foreign investors have helped boost prices up to 2007 levels.

The country-house market is also flourishing with the average value now nearly 8% higher than last year and prices in the Home Counties showing an increase of 10.7%. However there is little hope that this recovery will be sustained with some offices reporting that prices are already starting to flatten out.

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