Another month, another fall in the Halifax house price index.

And we can expect that to continue for some while yet, despite the cash transfusion pumped into the financial system and the monetary defibrillation provided by a concert of central banks cutting interest rates.

The patient is ill and recovery will take some time. The good news is that we may have avoided the need to read the last rights.

So what does the latest Halifax survey tell us and what does it hint at for the future?

As I have suggested before house price indexes should be treated with extreme caution at present. But they do tell us something.

And in the case of Halifax it is that house prices are still falling.

No surprise there then. We know that just looking in estate agents windows. They are, however, continuing to fall fast if you accept the Halifax measure.

September saw a further drop of more than 1% (1.3% on the seasonally adjusted measure).

Strip away the seasonal adjustments and we have house prices down from the peak in August by about 14%.

That is good news for affordability. So, is the cut in mortgage rates, assuming they hold (which from where we stand now seems more likely than not).

Halifax estimates that the house price to earnings ratio – in effect one of the long-run “fundamental” relationships for house prices – has dropped from a peak of 5.84 last July to 5.02. This is against the long run average of about 4.

On this basis, and for a number of reasons, Halifax expects house prices to continue their decline. If the ratio comes back to average that puts the total correction in house prices at more than 30% from peak.

One might argue that cash is cheaper to borrow today than it was yesterday and (I am guessing here) this it may be cheaper than over the period that average house price to earnings ratio is measured. On that basis one might put the case for the ratio of house prices to earning to settle above the 4 mark.

Sadly, it may not work like that. Firstly, I suggest that you dismiss if you will all the nonsense spouted about huge latent demand and housing shortages. In the current context that is pub talk. “Latent demand” is just wishful thinking unless it is backed up by an ability to pay.

Cash may be cheaper, but access to it is the issue and it is going to remain tougher to get your hands on.

Firstly, if banks expect house prices to fall they will expect a bigger deposit relative to the assessed risk of default by the borrower.

Secondly, we are set for a long and perhaps (or should I say likely) painful period of deleveraging (and if you don’t believe me trawl through the latest tome on the World Economic Outlook by the IMF and judge for yourself).

This means we will be spending a rather dull period purging ourselves of some of the excess debt we have accumulated in the binge years we have just enjoyed. This too will colour the minds of lenders, as it may mean recession – or should I say it will mean recession if you take the IMF position. And that adds risk in the shape of redundancies.

Put bluntly, the days of easy money are over.

A pessimistic take on this is that the house price to earning ratio will fall below the long term average.

So if the falls in house prices are over a short period we may be looking at a drop in cash terms in houses of about 30%. That is one hefty hit.

Of more concern to the house building and construction industry is that it may be access to cash rather than its price (in the form of mortgage rates) that ends up constraining the number of transactions and restrains the new build market.

We are in unchartered waters here, so we will have to watch and learn.