For the housing market to come back to life quicker, wages must rise or housing costs must go down. There has been a small indication of the latter, but at the same time lending criteria is tightening. Jeremy Grantham, a veteran of an US investment firm and specialized in housing market trends, believes the UK housing market is in a bubble state which will have trouble bursting.

Grantham defines a bubble as a situation which is a "two standard deviation event", or something happening about every 40 years. By his opinion, the UK housing market had gone well beyond that in 2007. In his opinion, prices should revert back to the range of where they were before the bubble.

Within the UK market, he is referring to the afford ability of housing in general. To afford a house now, pricing would have to drop 25 per cent to instantly be back at the long term average. This percentage is based on the house price to earnings ratio, which is currently running at 5.4 times earnings. The long-run average is house pricing four times earnings.

It would be more than just a stretch for housing prices to drop 25 per cent today, or any day for that matter.

What the housing market is facing from the opinion of Grantham, is that its all uphill from here. House pricing is not going to drop 25 per cent tomorrow, or even 10 per cent. Wages will not increase by a like amount or anything close in the near future. Also, taxes will not be cut back, and that includes the upcoming hike in the VAT.

The fact is, the UK housing market is headed for several years of regaining afford ability. House prices will continue on a steady sideways or possibly downward trend. And those looking to benefit from the sale of their home as part of their pension, will have to exploit a different resource.