Professor Philip Lane:

Taking out a mortgage is a consequential decision. If a person is absolutely planning on taking out a mortgage now and absolutely planning on trading up in two or three years time, the person needs to recognise that risk. For people, however, who are planning on living in that home for a sustained period of time, the fact that house prices rise or fall should not be a matter for over concern. When people are trying to flip houses, however, and the kinds of stuff that happened in the boom of 15 years ago it means that they should not count on expected demand and a one-way only momentum. For all mortgages now and for first-time buyers there is pretty much no lending above 90% so there is already a lot of protection there. The system is a lot more resilient now. I am troubled, however, by the temptation in some quarters to believe that it is one direction only. Over time there will be a natural increase in house prices. Over decade by decade house prices rise in line with the fact that GDP and incomes go up, but over a shorter period of time - as we have just spoken of - it is not a one-way bet.