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Safe as houses

There may be a hiccup this year, but in the long term house prices will continue their upward march

By Tim Leunig   146

As an economist, it is easier for me to predict house prices in five years’ time than in a year’s time, for two reasons. First, while fundamentals drive long-term house price movements, short-term movements are driven by sentiment. For that you need a psychologist, not an economist. Second, if I predict house prices in five years’ time, people will have forgotten my prediction by the time we can assess its accuracy—although if I am right, I will remind people of it when the time comes. Shorter predictions give the reader less time to forget.

But let me take the plunge…

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