The BBC's 'Property Watch' this week made fairly terrifying viewing, as a succession of BTL investors were wheeled out to explain how they had borrowed millions of pounds at the top of the market, and now found themselves living under cardboard boxes while trying to sidestep the repo men. One remarkably cheerful woman had jacked in her local authority job to become a full-time landlord, borrowing £7.5m to fund 50-odd properties, many arranged as HMOs (houses of multiple occupancy). It's all in the edit, as they say, but if the properties they showed onscreen are representive of her portfolio then even the rats would be packing their bags and leaving. Worryingly, the efferverscent 'investor' said that she was 'just waiting for the upturn' to refloat her financial boat - and that if she could get her hands on some cash she'd be getting back into the market. Arrrgh! There is a not very fine line between property investment and mental illness and I fear this woman had crossed it long ago.

So lots of horror stories of people trapped in negative equity and people struggling to get onto the housing ladder. But 'Property Watch' found itself with the perennial problem of what angle to put on the slide. Rising prices, a buoyant market are good right? We want our investments to grow, we don't want to owe more than the value of our houses. Yet it's just this buoyant market that cuts first-time buyers out - hence the bearish insistence by the likes of 'Money Week' and 'The Guardian' that this collapse is an adjustment or a correction rather than a problem. A fall may be painful, but it brings property prices back to affordable multiples. To hammer home this point we saw James, 27, desperate to get himself into debt so he could 'afford' to buy a £159,000 house on a £12,000 income. I apologise for the rash of quotes here, but irony feels the only recourse when you're viewing this sort of insanity.

Patrick Collinson in 'The Guardian' has no doubts. We've become brainwashed into seeing rising prices as a good thing, when what we need is a drop. He quotes a 'Property Watch' ICM poll which found that 64% of us want prices to stay the same or fall, with younger people wanting a fall. Well yes, and I'd quite like a lifetime's supply of free beer and my own private car lane around London but that doesn't mean I should have them, nor that it would be a good thing for me and the rest of society if I did. Price inflation got out of hand and put property at unaffordable multiples, but that doesn't mean deflation is better.

A growing economy needs a level of controlled inflation - it's a stimulus to further growth as people invest with a reasonable expectation of getting a return - not to see their house as an equity release cash machine, funding holidays and new cars, simply a reasonable return. You can have a deflationary economy if you like but it's also a dead economy - witness Margaret Thatcher's baleful effect on Britain in the early nineties before Nigel Lawson brought in his own bubble to get things moving again. And though young people may want house prices to fall so they can afford them, do they then want them to keep falling, thus finding themselves in negative equity and thus with more expensive mortgages or with a property they are unable to sell when they want to move up to a larger house (as they will). And where is the incentive for professional landlords to buy and invest in improving property when that asset is going to fall in price? To be fair, Patrick hates BTL landlords anyway, but they aren't going away and they do fill a necessary role in the UK housing market - all those people certainly aren't going to get council houses, Mrs Thatcher sold em off remember?

So enjoy the correction if you are trying to buy your first home, you may get a bargain. But don't pray for continuing falls. Ask instead why we don't have a policy in this country of building enough affordable homes (to buy, part buy or rent) for everybody who needs them. That alone would prevent the next property bubble from inflating.

I'm not sure the 'buy to let party is over', as one UK national paper had it this week. Serious landlords have always been into property for the long haul, and that means troughs as well as peaks, not my idea of a party! And the ten-year bull market in residential property was never going to continue. But news this week that rents are on the way down adds to a triple whammy for anyone who bought in over the last three or four years.

During last year, many were glibly asserting that as nobody was buying, they would all be renting instead. Pressure on rental properties would thus mean prices rising. Except of course, many of those who couldn't sell were simply dumping their properties onto the rental market, these 'accidental landlords' raising supply and so reducing rents - simple supply and demand. Then, there is the more nebulous element of reduced economic activity. The economy is slowing, deflating, with fewer people taking on new jobs and moving to new cities to do so - all this can only depress demand for rental property, and of course those who do want to rent have smaller salary deals, so will pay less or move downmarket.

Now if you bought into the market late, and so are operating on sub-5% yields, any reduction in rents can take you into a monthly loss. If you're on a fixed rate mortgage (or if your lender is tardy about passing interest rate cuts on, as we know they have been) then there is no equivalent cut in costs to offset lost income. Bad enough for you yet? Now to pour water on a drowning man. You're less likely to smoothly reduce rents to meet the new equilibrium rent than simply find that your flat stands empty for a while at the end of its tenancy - price in the rental market is inelastic like that. So no smooth adjustment of finances but a sudden hole punched in your monthly balance sheet. And to add insult to injury, you're now having to pay the Council Tax that the tenant previously paid. On a one-bedroom London flat that might mean the loss of £1000 pcm rent plus an additional £100pcm in Council Tax.

The smart move? Cut rents to get that void filled as soon as possible.