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Housing's productivity problem

Official figures last week showed that total hours worked rose by 1 per cent in the three months to January. With the NIESR estimating that real GDP grew by only 0.4 per cent in this time, this implies that productivity fell sharply, and has barely grown at all since the end of 2007.

Common sense says this should matter for house prices. This is because, in the long run, house prices should depend upon wages and in the long run these are set largely by productivity: it's no accident that real wages have stagnated as well as productivity since 2007.

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