According to figures released by the land registry house prices dropped by 1% in June. This gives us an annual growth rate of about 0.1% which is quite a change from a year or two ago when monthly rises around 2% were not unusual.

The change has been blamed on the tighter restrictions placed by the mortgage providers on potential borrowers but it surely had to happen sometime, credit crunch or no credit crunch. The growth in house prices was encouraged by easier lending practices and a greater flow of available money but the borrowing had to stop sometime. You just cannot go on increasing your debt forever. Everybody knows this but somehow all those involved in the housing industry convinced themselves that prices could just keep climbing forever.

The National Housing Federation have also released some figures and they seem to think that house prices will rise 25% by the year 2013. Maybe they are right but if so that only equates to 5% per year which is not so far above inflation at the moment. They base their figures on the fact that there will be a shortage of housing and that will push prices up. Supply and demand is the most important factor but it still needs buyers who can afford to buy a house. Current prices of around £175,000 for a house mean that a buyer needs a deposit of about £20,000 and that takes some saving these days. Most people would have to save for years to get anywhere near that figure and the way house prices have been for the last few years anybody saving towards buying a house has seen the prices rising faster than they could save towards a deposit.

The best thing for most people would be a stable period for house prices and for those trying to get on the ladder the best thing would be a housing crash. Of course neither of these are events that those employed in the housing and finance industries want to see and they will continue to attempt to talk up the price of houses.

Money Magic: Seven Simple Steps to True Financial Freedom (Quick Reads)

When you come face to face with serious debt problems it puts all the talk and all the chatter into perspective. We are always hearing politicians going on about the banking crisis and the government are prepared to put millions into the system to help out what we were told only a year or two ago were the wealthiest companies in the country.

They talk about helping people in debt but I came across a case recently where I am just left wondering if they really know what they are doing.

I was asked to help out a friend, to sort out their financial paperwork so they could get a handle on just what their situation was. So, we sorted out all the different letters from different debt collection agencies and I was astonished that at the end of it we had about 15 individual piles of paperwork relating to different debts.

Now, it is often said by those who have no financial problems that people cause their own debt problems and to some extent and sometimes this may be true but most times it is caused by a change in circumstances beyond the control of the individual. When all their plans were affected by a significant change in their circumstances. It could happen to any of us.

If you are sitting there feeling smug and saying that it couldn’t happen to you just answer this. If you lost your job and couldn’t find another, and/or became unable to work through ill health and/or you went through a divorce that at best halved your income and investments and at worst left you with next to nothing. How would you cope? It is an all too common scenario.

Now in the particular case I was helping with, this person had been left with debts raised by the ex partner who had never made any attempt to repay those debts and the ex partner has fled the scene, gone into hiding and is nowhere to be found. To add to their problems this person suffers with ill health which leaves them incapable of working at this time.

So what would you do with 15 different debts with constantly increasing charges? In some of these cases the charges are greater than the original debt. This person wants to do the right thing and pay those debts but the charges mean there is never enough money to pay everyone so yet more charges are added, more letters are written and more threats are threatened. It is a nightmare scenario for anybody to find themselves in and one that you would not wish on your worst enemy.

When Northern Rock were struggling the government stepped in and supplied billions to enable them to work through their problems. Why is such a facility denied to ordinary people? Nobody knows exactly how much the government invested in Northern Rock but it was said to be around £1,000 for every man woman and child in the country.

Would it not make sense to have some sort of similar facility available to the relatively few people who do become overwhelmed by their debts, often through no fault of their own and who genuinely want to overcome their difficult situation and pay off their debts? Such a system would help the individual get back on their feet so they can rebuild their confidence and pride and get back to working and supporting themselves.

It would get the banks the cash they are demanding and help stop them wasting time and resources on debts that will never otherwise be repaid.

It would cut the massive cost to the state of having to help support people who cannot afford to feed and house themselves because all their money is drained away by debt collection agencies.

I am reminded of the phrase that is often used when referring to charity work. Give a man a fish and you need to keep feeding him each day. Give a man the tools to fish and he can feed himself for life.

This is similar situation where people who are given support to overcome their debts will go on to contribute to the tax system and feed themselves but those who can never overcome their debts are likely to continue to be a burden on the state. The banks will never get their money and everybody is left unhappy and unsatisfied.

Generally speaking people have pride and do not want handouts. They want support to enable them to look after themselves. To me that seems to be at the heart of what governments should be doing for their people and I feel sure this would also be in the Government’s and in the Bank’s best interests too.

If you or someone you know from England, Scotland or Wales suffering from debt problems they can get free and independent financial advice from The National Debtline on 0808 808 4000

Money Magic: Seven Simple Steps to True Financial Freedom (Quick Reads)