UK housing: remember who told you so?

But there is much worse to come. All you really have to do is to look at rental yields in the UK which are now below 5%, and fell as low as 2% in some extreme cases at the height of the housing bubble. This is simply far too low to make it worth owning, maintaining and letting a property - unless you believe capital growth is inevitable.

You also only had to look at the loony prices people were asking for shoebox-sized accommodation in the UK. Even the most brilliant interior designers were struggling to find sufficient space for the residents to breathe.

No after 10 years of rising prices a UK property market 'correction' was about four to five years' overdue, and that means it just has to be a big one, probably the biggest on record. We are at least back to the early 1990s, and a 40-50% retreat in prices is on the cards.

It will not happen all at once. From 1991 to 1993 UK house prices fell remorselessly under the pressure of surging interest rates, and the expected bounce back never happened - until 1996. So what has gone up will take quite a long time to come down.

The fact that interest rates are nothing like as high as in the 1990s makes no difference, because actual house prices are so much higher than they were then. Now we face a market that is coming to terms with reality and which will panic in the reverse direction.

That is what the 41% fall in mortgage applications during December means. Imagine the impact of a 41% fall in customers on any market. A collapse in mortgage demand can mean only one thing for house prices.

It is self-fulfilling. As soon as a customer believes a price is falling they will wait until it does, and then perhaps decide to wait for a further fall.

So what do you do if you still own UK property? You can either choose to ride-out the cycle and enjoy the rise in rentals that such a collapse in house sales will produce. Or you could decide to cut and run, perhaps throwing your home into an auction.

Property is a long-term investment - and some would say the definition of a long-term investment is one that has gone wrong - so the option of riding-out the storm may be attractive if you can afford to do it, and wait until the property cycle comes around again.

However, if your finances are overstretched then taking-it-on-the-chin now may prove less expensive than agonizing for another year or two before doing the same thing.

The danger is that what we have seen so far is just the tip of an iceberg. When an investment bubble bursts in a major asset class it is not something that you want to get caught up in. Remember the NASDAQ crash of 2000 and the massive losses on Internet stocks?

So a cool assessment of the outlook is called for by UK home buyers who got caught up in the collective illusion that you can not loose on buying bricks-and-mortar, despite the very clear and painful experience of the early 1990s.

Again we saw the madness of crowds in an investment mania - and watch for the UK government to cut and run for an early General Election before people fully realize what is happening.