Certainly, there are many ways in which prices might fall. Most obviously and immediately, if you fear your job might move to Paris or Dublin, or disappear entirely, you won't want to incur the huge deadweight costs of moving house. This uncertainty was depressing demand even before the result of the referendum was known; the RICS reported a big fall in sales and new buyer enquiries last month.
In the longer term, the lower incomes that will result from lower exports will also reduce prices, if not from present levels then at least relative to what they would have been had we voted to stay in the EU. And if Brexit reduces net migration, demand for housing will also fall, especially if it is skilled migrants who are repelled.
There might also be an atmospheric effect. Researchers at Saïd Business School have shown that demand for houses in London is driven in part by a safe-haven effect; people worried about political instability in their home countries buy a place in London. If Brexit leads to the UK appearing less stable and welcoming, this safe-haven demand will fall. This might have trickle-down effects to the rest of the country.
House PE ratio and index-linked gilts
And then there's the political effect. New prime minister Theresa May has promised "more housing". If she can deliver this, increased supply will mean lower prices, at least relative to what would otherwise be the case.
All these are reasons to expect prices to soften. But there are two offsetting mechanisms.
One is that Mrs May has also promised less fiscal austerity: she's abandoned the target of a budget surplus by 2020. Insofar as this raises incomes generally, it should support house prices.
Also, we face the possibility not only of lower mortgage rates - economists expect a cut in Bank rate next month - but of increased willingness to lend: the Bank of England's decision to cut capital buffers has increased banks' lending capacity by £150bn. Nobody expects this money to finance business investment.
This monetary easing could be very important. For years, there's been a strong correlation between real interest rates and the ratio of house prices to earnings; as real rates have fallen, prices have risen relative to incomes. This is common sense: lower long-term rates increase the discounted present value of future rental income and so should increase house prices.
Perhaps, therefore, lower interest rates will eventually mitigate the impact of increased uncertainty.
On balance, my hunch is that they will do so only partially. This is not least because tougher tax treatment of buy-to-let properties and a lack of affordability are also weighing on prices. However, the issue is not as clear-cut as you might think. It's quite possible, therefore, that the sell-off in housebuilders has been too great.
