The house price rally has run out of steam - what's next?

The house price rally has most definitely run out of steam. Nationwide building society reported this morning that prices fell by 0.5% during July. Annual price inflation fell from 8.7% in June to 6.6%. Apparently the average house in Britain will now set you back a mere £169,347. The Land Registry disagrees slightly. It reckons prices were sitting at around £166,072 in June. But let's not quibble over a few grand. This is roughly where prices were sitting in mid-2006. And there's been a barrage of data pointing to further falls in the coming months. So are we heading for a second crash?