Will house prices collapse?


IF we can use economics to find love can we use it to predict when and how big the collapse in the housing market is going to be?

Guest expert Tim Harford, aka The Undercover Economist, gives alternative answers to questions using the power of economics:

Great question. I think economics is more useful for finding love than predicting house prices. The problem is this: economics assumes people act rationally.

If that's true then it's impossible to predict what house prices will do, because rational house buyers will always be one step ahead of the forecaster.

House prices predicted to rise by 20% next month? Sorry, they already did because rational buyers moved quickly to take advantage.

Now, maybe people don't behave rationally after all. In that case maybe a psychologist could predict house prices, but an economist certainly couldn't. I'll stick to giving out dating advice: lovelorn singles are more calculating than you think...

Useful links

>> Latest property news - www.thisismoney.co.uk/houseprices

Will house prices collapse?

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