The housing market

[Marv]

While reading this article on house prices I came across the following two lines;

Mr Miles says the single biggest factor driving up house prices in the past decade has been the expectation of buyers that prices will keep on rising.

[...]he says the expectation that prices will keep on rising by about 10% every year has accounted for between one-third and half of the excessive rise in prices seen in the past 10 years.

So according to this line of thinking, the reason for such huge inflation is house prices is that we all "think" that they will, then the powers that be put them up knowing we are all braced for it. Filling fat pockets because we are brainwashed into a line of thinking.

If this is the case, how do we combat this? He is quoted as saying that they will drop once we stop expecting them to rise. If this is so simple a solution, why do they keep going up?

As a student in my second year it's started to worry me that in 2-3 years I will be trying to get on the housing ladder, what’s the situation going to be like when I try?

Am I going to end up (say 3 years from now, so 2009) in a situation were the housing market is in such limbo it's to hard to fathom what’s going on or make stable judgement weather the house I buy is an investment or something which is going to potentially loose me money? Or are they just going to keep rising and even more out of my league so I am back with my parents unable to enter the housing market due to its continued growth and potential extortion?

I am hoping for the former.