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Take the long view on price of houses

As Prime Minister David Cameron has reminded us, we live in troubled economic times, although I’m not sure too many people needed telling.

As an economist it’s interesting to see the ordinary man on the Clapham omnibus now taking an interest in what 10 years ago would have been described as perhaps the world’s most boring subject.

Nowhere does this touch people’s views more than in the movement of house prices – which of course have been the subject of much debate especially in the 15 years up to 2008.

This is a period that history will show to have been an exceptionally good time for house price inflation.

The trouble in Europe and its effect on house prices, particularly in Greece and Spain, has sparked a debate over potential UK contagion.

Whether this happens or not, what matters of course is the long-term performance of house prices in Britain.

Survey after survey going back over hundreds of years point to real growth over and above inflation.

They are not making any more land, as Mark Twain remarked.

For equity release, while time frames are not that long, they are typically 15 years or more.

Indeed it is the house price at the end of the product period that has the greatest effect on the client, so today’s volatility should not worry us too much. As with most things in life I find that taking the long view seems to be the best approach.

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