Just as we here at PROFIT CONFIDENTIAL predicted back in May, the UK housing market is now at its lowest point in the past decade.

If you recall, the May Rightmove House Price Index (the largest monthly sample of residential property prices in the UK) was headlined with the following ominous phrase: "Heading for the Worst Housing Market in a Decade."

My commentary following the Index release revealed that house prices were barely creeping up, and the number of closings had dropped to their lowest level in 10 years. From May 2004 to May 2005, prices were up only 4.5%--a big drop from previous months' growth rates.

Then, in June, Michael wrote a timely piece on how Britain has gone "From Sellers' Market to Buyers' Market in Less Than a Year." As Michael told us, "According to the Rightmove House Price Index (the largest monthly sample of UK residential property prices)... house prices in the UK rose only 2.4% from June 2004 to June 2005."

Last week, the July Rightmove House Price Index was released. Here's the lowdown:

---From July 2004 to July 2005, the average property asking price rose only 0.2% (as Michael discussed above in today's PROFIT CONFIDENTIAL), the lowest level in a decade.

---From June 2005 to July 2005, the average property asking price dropped by 1% (from +0.2% in June), the biggest fall since November 2004.

---The average UK home for sale is currently listed at £196,649 (or approximately US$341,950).

Now, according to Rightmove, we shouldn't worry about these figures. After saying "This is the lowest rate of annual increase for 10 years," the report gives us the following statements to ponder:

---"With annual wage increases running at 4.1% (Office for National Statistics) this further boosts buyer affordability."

---"Boost for buyers as reality strikes sellers with onset of summer holiday season."

---"Recovering demand and affordability reduce price crash prospects further."

I don't know what those Rightmove guys could possibly be thinking...

According to a British organization, Credit Action:

---UK personal debt will rise above £1.1 trillion this month.

---"2004 saw the largest single-year increase in debt since the Bank of England was founded in 1694."

---Personal loans have increased 10% this year.

---Credit-card debt in April 2005 was £55 billion.

---Necessity spending (groceries and gas) make up 44% of recent credit charges.

---The number of British people working with Credit Counseling Services is up almost 100% in the past year.

---Personal bankruptcies are up 30% year over year.

When you take the serious reality of personal debt into consideration, there is no way that slightly lower house prices will make housing "more affordable" for the average Brit.

Rightmove is saying that the affordability of houses will stop the real estate bubble from bursting. No matter how "affordable" the houses may be, if no one buys them, the housing market will crash. That's what common sense tells me.

The domino effect of personal debt, a real estate crash, and a weak English economy will make the conditions right for the worst economy in a century, let alone the worst housing market in a decade.

Let's do everything in our power to stop the same thing from happening here at home... Although, from the looks of it, we're already well on our way to a repeat performance of this tragic story.