Forbes has this update on the UK. "UK asking prices for houses fell in August for the first time this year as the recent 'mini-boom' in house prices in the south-east of the country ran out of steam, a leading property website said. In its monthly survey, Rightmove said average asking prices fell by 1.6 pct to 214,040 stg in August. This is the biggest fall since November 2004 and the first time prices have fallen since December 2005."

"Given the Bank of England's interest rate rise earlier this month and expectations for further hikes to come, the record average asking price set in July is unlikely to be surpassed again this year, Rightmove said. 'Prices have passed their peak for 2006,' said Rightmove commercial director Miles Shipside."

"'The record price levels seen so far this year were driven by the south of the country. With that market cooling, and the signals from the Bank of England that interest rates may move up again, sellers may have to reduce their price expectations,' he said."

"Shipside added that with prices now cooling off, the housing market will 'require no further intervention from the Bank of England', as lower prices help buyer affordability but further interest rate rises will damage it again. 'It's a careful balance, but with more realism from sellers, we could be entering a period of stability again,' he said."

"Commenting on this month’s rate rise, Shipside added, 'Activity in the property market virtually stopped dead after two successive rate rises in 2004 and took a year to recover. Prices are now cooling off and require no further intervention from the Bank.'"

The Sydney Morning Herald reports from Australia. "The stagnant property market has taken a toll on a favourite Australian pastime: converting bricks and mortar into cash. The boom in equity withdrawn from housing and used to boost superannuation, bolster share portfolios and buy cars, overseas holidays and plasma televisions has petered out, a report by the Reserve Bank says."

"'The strong growth in housing equity withdrawal over 2001 to 2003 contributed to strong growth in consumption relative to income (and a corresponding decline in the saving rate) over that period … [but] these trends have subsequently abated,' a bank discussion paper published yesterday said."

"Now many families who bought housing near the property market's 2003 peak are facing negative equity."

"The federal Opposition seized on revelations in the Herald yesterday that properties in St Clair, near Penrith, sold at the weekend for 42 per cent less than the previous sale in 2003."

"'Stretched beyond the limit by three interest rate rises, they are being forced to sell," labor spokesman, Kim Carr, said. 'Plummeting property prices mean that hard-working families are confronting the financial catastrophe of negative equity.'"

"Such a prospect may not be confined to Sydney's outer suburbs, Tom Western, a valuer and NSW president of the Australian Property Institute, said yesterday. 'Anecdotal evidence suggests the market is slowing down in areas closer to the city, and not just in investment units,' Mr Western said. 'Over the past six weeks, the second-home buyer market in the inner and middle rings has shown signs of price weakness.'"

"The spring market would be testing. 'There are owners in the inner and middle ring suburbs in negative territory now. But they have been withdrawing their properties from the market. People have thought they can get their money back, but after the marketing campaign it is obvious the market has hit them between the eyes,' he said."

"Robert Mellor, of BIS Shrapnel, said Sydney house prices might fall a further 5 per cent this financial year because of higher interest rates, pushing more households into negative equity. The Reserve Bank study showed the bulk of housing equity withdrawal was undertaken by older households."