For those teetering on the edge of a property purchase there can be little comfort in the collective suspicion that house prices can’t carry on forever upwards. That the Royal Institution of Chartered Surveyors, Halifax and Nationwide are now reporting faltering demand is increasing the nervous reflections — of first-time buyers, second-home owners and even buy-to-let investors — on the horrible freefall of property prices at the end of the 1980s.

But the BBC’s economics editor and the brotherly host of the BBC Two’s Dragons’ Den, Evan Davis, has concluded that homes remain a sound investment. After examining UK property for a Radio 4 series, The Price of Property, he believes that even though average house prices have risen 199 per cent in a decade (according to the Halifax), property is still a good home for your money.

Davis, author of a blog, Evanomics, which includes a spirited defence of the Olympics budget, thinks that demand will slacken. The first retreat, he predicts, will be from modish investors in buy-to-let (and buy-to-sit, in which owners want only capital gains and need not fill their properties with tenants). These buyers, who often compete directly with beleaguered first-time buyers, have been seduced by the prospect of capital gains and have piled in without thought for surviving the current market cycle of lessening capital appreciation and higher costs.

This might bode ill for continued higher prices, but Davis maintains that significant, healthier, demand will remain. The flood of foreign buyers into the UK continues to bolster the market in London. Yet overseas capital is tentatively relocating to the more picturesque of regional areas. This foreign cash is, he says, a more stable presence in the UK market, motivated as it is mainly by the purchase of a home as a home, rather than as a creator of profit.

Davis, who reminds us that property is historially cheap because of low mortgage rates, says: “The investment demand for houses and second homes and for buy-to-let properties is a thing that swings the market up and down, but doesn’t fundamentally affect whether we want a second home to go to at the weekend.

“The current level of prices has been underpinned by the desire of other people simply to make money out of housing. There is good chance they will be disappointed in how much money they do make and then when they sell there will be bigger supply of housing for everybody else.”

The most surprisingly contention of the series is that a price fall might be just what many homeowners need. Indeed, many would find themselves better off: it is the buyers most obsessed with houses and prices — the young and upwardly mobile — who are worst affected by rising prices. True, it is better to be a home owner to take advantage of any capital gains, but any profits made will inevitably be needed for the next, ever less reachable, property. And Davis explains: “If you are upwardly mobile and you own only one property you should want prices to go down, not up. I would happily sell my flat for 50p if I could then buy Buckingham Palace for five quid.”

It is those trading down, to smaller homes or cheaper markets, who are free to applaud rising prices. He says: “It’s the downwardly mobile, people like my parents, who benefit. The paradox of the situation is that what do my parents have to do with the capital gain they have made on their house but help the likes of me to buy a property by using some of their equity.”

Those nervous buyers should take heart that even right now is a good time to commit. There is the comfort in knowing that house prices have risen on average by 2.7 per cent a year, not including inflation, since 1950, even during decades of busy housebuilding. This is not the handsome figure some might want, but Davis does say that house prices do double every 12 years or so. He explains: “If the speculative froth flowed away and house prices fell back you would expect them still to be quite high by international standards. A crash might make property cheaper but it won’t make it cheap.

“The reason to buy now is to gain a home and to be able to stop worrying about house prices. Once you’ve got one you can relax. You don’t have to worry about being priced out of the market because you are locked into the system.”

Davis, a former research fellow at London Business School, was an economist at the Institute for Fiscal Studies before taking on his BBC role in 2001. In the final instalment, to be broadcast on Tuesday, he will present his thoughts on how to encourage building and to improve access. There are, it seems, no painless solutions.

As the market works it way through its cycle, Davis contends that the appetite for building will ease supply, assuaging “overconsumption” by some buyers and allowing some of the have-nots on to the ladder. But he reassures us: “The problem of supply will never really go away. If our incomes carry on growing as they have done, with every generation more or less twice as rich as the previous generation, then you can expect that each generation will want to live in housing better than the previous one had. When everyone’s a millionaire, they will all want to live like millionaires do.”

That’s exactly why, price falls this year or a swath of new homes next year, it’s always worth investing in property.

The final part of The Price of Property can be heard on Radio 4 on Tuesday at 9am or at www.bbc.co.uk/radio4/listenagain

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