The housing market. It’s a national obsession. Doubly so if you work in the construction industry and your memory stretches back to the early 1990s, the big crash and the grisly business of cutting people out of the wreckage of their homes and jobs.

But that does not mean that the gloomy indicators – which are now coming thick and fast – should be triggering anxiety attacks. Most construction forecasters have been predicting for a while that the market will come off the boil in 2005. And most of the surveys say prices will descend gently, buoyed up as they are by housing undersupply, steady economic growth and the general confidence in employment.

What has come as a surprise is just how quickly the market has cooled. The speedy effect of recent interest rate rises has been highlighted by the National Association of Estate Agents, which reported a fall in house prices for the fourth consecutive month. This was backed up by a survey from the RICS that found that the proportion of its members reporting price falls was the highest for nine years, and that the outlook was much bleaker than a few months ago. Then there was Wimpey’s trading statement last week, which talked about “more challenging conditions”, another downbeat statement from Countryside Properties (page 19) and Taylor Woodrow’s warning to the stock market that sales will be down 6%. And finally, there was that decision by Tony Pidgely to cut production and focus on regeneration: was it because he smelled recession in the air?

Clearly any suggestion that there will be a reduction in the number of homes built – one likely impact of a fall in prices – is not a bad bargaining chip for housebuilders to use in their negotiations with the government. A fall in numbers is the last thing Prescott wants if plans to tackle the housing shortages are to remain on course. Perhaps this is why the government appears to be backing away from plans to use PPG3 to dictate the sizes of homes (see page 13). Wisely, too.

The swift correction of the housing market also brings other benefits, not least the return of the first-time buyer and the promise of greater affordability for those in the South-east. And although nurses and teachers are the ones usually cited as the main beneficiaries, it can’t do any harm to construction firms struggling to attract staff in the region (see salary survey, page 52-55).

The other silver lining that comes with this rather dark cloud is the likelihood that interest rates will not need to go up again. And that’s good news for order books in the commercial sector, which is just starting to wake up and stretch after its three-year hibernation.