The best thing for the housing market is for the prices to remain as they are for years.
No drop means less negative equity, but no rise means inflation will, in effect, bring the prices down.

However we're still driven by supply and demand. The polulation is rising much faster than houses are being build. Unfortunately that means both house pries and rents will rise.

And yet there are houses standing empty.

The problem is, everyone wants to live somewhere "nice" and often by themselves at a young age. When I were lad, t'were normal to have 3 generations living under one roof. Folks had to work and save until they could afford things.

Folks today have never had it so good. The high life on credit, and then complain it's not enough...

Took me eight years to save a 5% deposit in the cheapest house I could afford that I was actually able to move into - as oppose to something that would have 'needed work' to become habitable. A few years later there were people I knew earning roughly the same as me moving into new houses priced at twice mine with a 100% mortgages they could only afford to keep up if they assumed they'd need no discretionary spending at all, for years. Madness.

Despite being on a well below average wage, I managed to save up a 30% deposit in about 5 years ('93 to '98). It was my priority, so I lived in an unheated attic room as cheaply as possible. My average weekly expenditure over that time was £50 for rent and £20 for absolutely everything else. I even managed to save when I was on unemployment benefit, and that's despite drinking and smoking.

The problem is that jobs are concentrated in the South. I'm sure a lot of people would live at home or in the "less desirable areas" if there was jobs there.

I moved to the UK because where I come from is very similar to Northern England, over 30 % unemployment, no advanced technology / consultancies want to settle there.

Also, the tiny 2-3 bed house opposite where I currently live is on the market for 475k. It's about the size of a terraced house. I guess better start saving on that 50k deposit then, might be there in 20 years :S.

Interest only mortgages have a place but as with a lot that went on in the boom years (like self certs) all the normal lending controls were thrown out of the window

Not really and only for a few years at most. The problem is that we are probably going to have a stagnant (except London) housing market at best for the next twenty years and then that looks really bad for those with interest only mortgages. If the market plummets then you very rapidly get into trouble. At least with repayment mortgages if prices fall below your buying price then there is the possibility that you will have paid enough off to still not be in negative equity. That possibility does not exists with interest only mortgages.

The borrower is supposed to have some plan to pay off the loan at the end - origonally this would have been the endowment plan that the banks sold. However many people have just burried thier heads in the sand and of course have lived up to thier income / small mortgage. Ideally the lender should be seeing thier borrowers and confirming that they have the means / a realistic plan on how they will pay off the mortgage and if they do not feel that there is one then move them onto a replayment mortgage

I know at least one person who's plan to pay off the mortgage was to re-mortgage...

Yes supposed to is true but many would be first time buyers who could not afford the additional cost of a repayment mortgage so went for low cost endowments and interest rate only to get on the housing ladder. Lenders once they have sold the mortgage do not really care about the borrowers ability to repay. At the very least they could still get the property and if the market had risen by then they could still sell it on and recover their loan from the proceeds. Plus if there were a shortfall they could recover it from borrowers incomes as mortgages are recourse.

The clue is in the name surely?

Exactly - this was not some complex rate swapping product that maybe someone would not understand - its simple - it is what it says on the tin - so overall I don't have a lot of sympathy

Why is that exactly? What if I don't want to own it at the end? Paying just the interest is an alternative to renting. You own your house, you can make changes to it in any way you want and you get to benefit from the price appreciation.

If thats ok with you then thats fine but if its not what you want dont go bleating about how unfair etc for your failure to plan correctly when faced with a big bill at the end

Agreed.