Bank of England chief economist Charles Bean has warned of considerable uncertainty in the housing market.

Speaking to the Colchester Town Partnership, he also suggested that interest rates may not have peaked.

With consumer spending and house prices slowing, Mr Bean said that “it must be recognised that there is considerable uncertainty here, both about the extent and duration in the slowing of house price inflation and the strength of the connection with consumer demand.”

However, for those intending to buy there was a slight welcome note – the suggestion that house prices will ease, however they won’t fall dramitically:

“An average house today costs about six times average annual earnings, whereas the historical multiple is somewhat below four. Now there are good reasons why house prices should have risen relative to earnings. The transition to a low inflation, low interest rate environment has shiftedthe real burden of repayments for a typical mortgage into the future, so making it easier initially for cash-strapped households to service a loan of a given size.Demographic and social developments mean the number of households has been rising, while until recently the rate of house building has been low. And disillusion with the performance of the stock market and concerns about the value of pension promises may have boosted the demand for property as a vehicle for retirement saving. Nevertheless, it is difficult to rationalise the full extent of the increase in house prices and it is likely that the ratio of house prices to earnings will probably continue to ease for a while, though a return to historical norms seems unlikely.”