Teresa Hunter's Final Statement: Property needs strong leadership

GEORGE Bush said they "misunderestimated me". Don't laugh. We have committed two major misunderestimations of late and on Thursday could be about to make a third.

Take the housing market. Prices have risen by 10 per cent over the past year, the first double digit rise since June 2007, according to the Nationwide, with a momentum which has taken commentators completely by surprise.

Yet even this climb is dwarfed by the velocity of Lib Dem leader Nick Clegg's rise, rocketing from zero to hero almost overnight.

What welcome diversions these have been, even if, on closer inspection they seem as authentic as one of Gordon Brown's camera-best smiles.

The house price story is far from happy. Not only are UK prices 10 per cent below the peak of October 2007, shockingly they are lower than when this Parliament began five years ago, after allowing for inflation.

Now that medicine leaves a nasty taste, the thought that your house is worth less than it was five years ago. In fact, values are quite a bit lower, having fallen in real terms by 6 per cent.

Many voters will this weekend be deciding who to vote for. On the page opposite, we analyse the different tax proposals, which may help you decide. Most of us are sensible enough to know this is only part of the story.

Whoever wins will have to get to grips with the 164 billion we spend each year more than we can afford. Labour's tax plans would raise an extra 16bn, the Conservatives 10bn and the Lib Dems 20bn. Just another 140bn to go.

Find it they will have to, or the markets will do it for us, and we will have an austerity package foisted on us.

After you've worked out which party leaves you more cash in your pocket, you may fear what the election could do to mortgages and house prices.

This will depend on interest rates, inflation, sterling, unemployment and general confidence when the next administration takes office.

Low interest rates have kept the house price fire burning, while a weak pound saw property an attractive investment for overseas buyers. Higher taxes on pensions with the threat of more to come leaves homes a plausible tax-free cash cow. Finally bricks and mortar are a hedge against eroding savings given 4.4 per cent inflation.

A decisive outcome for one party with a credible plan to cut the deficit would seem to offer the best opportunity of keeping interest rates low, mortgage payments down and give house prices a fighting chance.

Similarly, a hung parliament where the parties worked together and drew up a common strategy which they all implemented with equal vigour could have us tripping down the yellow brick road.

My concern is that the lack of a decisive outcome would see Westminster paralysed for months arguing over electoral reform.

In which case the markets would lose patience, interest rates might climb. Certainly, the housing market didn't thrive during our last hung parliament. Prices fell by 7 per cent in real terms in 1977, the year of the Lib-Lab pact.

I took my slide rule over property during the last 40 years to see whether the housing market did better under one party rather than another, with some interesting results.

They rose by 95 per cent after allowing for inflation under Thatcher, fell 50 per cent in real terms under John Major, rose 65 per cent under Tony Blair, before falling 6 per cent over the last Parliament.

This points, regardless of political bias, to the housing market favouring strong government.

Back to work, Mervyn

MERVYN King, governor of the Bank of England, must have been tippling on ouzo when he made his now famous comment that whoever win this election will be out of power for a generation, so awful are the austerity measures that will have to be imposed.

Perhaps there's a little bit of him that yearns to throw off his bookish skin and emerge like Zorba the Greek, a man of passion, vitality and adventure.

The problem, with Zorba though, is he never learns. Though he faces his problem with courage and initiative, his every solution falls flat on its face. I guess you can't buck your Mediterranean genes.

So we suggest Mr King forgets all about Greek sunsets. He can't afford them anyway. And get back to his books.