House prices fell 2.2% in October to the level they first reached more than three years ago, according to the latest Halifax figures.

But how far can they fall?

That was a question put to me yesterday. I hate doing prediction, not enough gypsy blood I guess.

But I obliged with a suggestion which was more or less this.

If growth were at roughly historic rates given the prevailing inflation and GDP, the trend growth in house prices since 2000 would have provided a natural increase of say 5% per annum.

I recall plenty of people bemoaning the house prices in 2000 as they scoured the property pages and loitered in front of estate agents windows.

So let's say the figure for 2000 was about right for its time. Compound up on the basis of an annual 5% growth since then (on the Halifax figures) and you get an assumed average house price for today of £125,500, given the average house cost about £85,000 in 2000.

Now at almost 40% less in cash terms that may seem madly low against the £201,000 reached in August last year, but be prepared for even more madness if the market overshoots.

I am not suggesting that house prices will fall that low, despite being regarded by many as a gloom monger. The truth is where I have been foolish enough to try to read the future of late I have been rather behind the curve in my judgment of how bad things could get.