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House price projections
01 February 2005
Request: Whether Her Majesty’s Treasury has compiled any projections for the trend in UK house prices for 2005 and, if so, what they are.
Disclosure: The Treasury publishes forecasts for the ratio of UK house prices to average earnings (wages and salaries per employee) as part of the wider economic forecasts that get published twice a year in Pre-Budget and Budget Reports. The forecasts for this ratio appear in chart form in the document ´The economy: supplementary charts and tables’. The 2004 Pre-Budget Report version of this document can be accessed on the Treasury website and the relevant forecast is shown in chart 8 on page 8.
This latest Treasury forecast shows that the house price-earnings ratio in 2005 is forecast to be 1 per cent lower on average than in 2004. The 2004 Pre-Budget Report (paragraph A102, page 187) also included the view that ‘UK house prices continue to pose risks both ways, despite recent signs of gradual adjustment. While a smooth adjustment remains the most likely outcome, a sharper correction cannot be ruled out’.
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