Calling half time in the UK house price crash

According to Nationwide, UK house prices have fallen 19% from their October 2007 peak and are now equivalent to 4.1x average earnings. Given that wages are unlikely to rise due to falling inflation and rising unemployment, house prices will have to fall a further 20% in order to reach a multiple of 3.3x earnings, in line with their long term average.

However, it could be argued that UK house prices can sustain a higher multiple due to lower interest rates (UK base rates averaged 11.7% in the 1980's, 7.8% in the 1990's and 4.6% since 2000 according to the Bank of England) and increased availability of mortgage finance, notwithstanding the current credit crunch. Therefore, assuming a higher P/E ratio of 3.5x, UK house prices would have to fall a further -15% in order to reach equilibrium, which means we're only half way through the crash!