Advice to first-time buyers and investors: don't do it

After the heady market conditions of last year - with its gazumping and 125 per cent mortgages - the spring downturn is starting to cause panic.

The market is facing gridlock because many sellers are being unrealistic about prices.

At the same time buyers are reluctant to commit to a market that they think - quite rightly - has further to fall. The result? A freeze. Houses are still going on sale at inflated prices but, in stark contrast to a year ago, no one is interested.

Prices are "slashed", but if they are reduced from a fictional original asking price the decreasing number of buyers will buy neither the "reduction" nor the house.

The result is a 40 per cent drop in property sales. So what should people do? As usual, it's horses for courses. For anyone who has no pressing need to sell, I would suggest not selling. Now is not the time to move house on a whim or to "test the market".

If you must sell, frequent reality checks are needed. If buyers are not biting, it can only be because your property is overpriced and no amount of wishful thinking or estate agent's jargon will change that. If you bought with a City bonus but now need to sell because your job is threatened by the credit squeeze, think very carefully.

There is a dearth of buyers out there and you must not delay the sale hoping someone will pay a larger price. Just find a buyer of some kind before prices fall further.

Anyone else facing redundancy or even repossession should make every effort to sell before the latter takes place. The experience of the early Nineties is that being repossessed is the worst possible option.

My advice to buyers - especially first-timers and investors - is much simpler: don't do it.

There can be no rational reason for buying anything, let alone the most expensive purchase of most people's lifetime, when the expert consensus is that it will lose at least 12 per cent of its value over the next two years.

This is also not the time for homeowners to move. The coming months - perhaps years - are likely to be quite stressful enough.