Stick it out and you'll be sitting pretty in the end

It is just over 20 years since Nigel Lawson's ill-conceived Budget abolition of double tax relief on mortgages.

The announcement helped trigger a scramble for properties before the axe fell in August 1988.

The rush pushed prices to absurd levels that the property market did not pass again for almost a decade.

We are at the same stage of the cycle, though this time it was cheap money and City bonuses that sent the market into frenzy.

As in 1989, when some debutant homeowners were left trapped for years in properties they did not like, in areas they hated, first-time buyers are worst affected.

Those who bought before the market turned last autumn are already probably sitting on a 10 per cent loss. For the small minority who paid with a 100 per cent mortgage, negative equity is back. For those who invested a 10 per cent deposit - bad luck, you've lost it.

But the comparison with the last great crash can only be pushed so far. In 1989 interest rates were heading up towards 15 per cent, where they stayed for a year. This time interest rates are at five per cent and falling. The burden will ease.

Many experts say prices could decline 20 per cent over the next few years. That is plausible. A 10 per cent drop this year followed by two flat years would deliver that in real terms. But first-time buyers should not panic, so long as they stay in work.

In three years they will have paid off a little chunk of their mortgage - not 10 per cent perhaps but better than nothing. They will be earning about 12 per cent more given average wage increases of about four per cent a year. On £30,000, that is an extra £220 a month. Their mortgage bills are likely to be lower.

They should also think about the alternatives. Over three years, in the rental market they will have handed perhaps £40,000 to a landlord.

These are nervous times. No one feels comfortable when they are getting worse off. But stick it out. People who bought in 1988 are sitting on huge profits and have only five years of their mortgage left to pay. There are worse positions to be in.