Tuesday May 13, 12:47 PM
UK govt sees 5-10 pct fall in house prices this year 'at best'
LONDON (Thomson Financial) - The government has admitted it does not know how bad the downturn in the housing market will get after a senior minister carelessly exposed her briefing notes to photographers on her way into Downing Street for the
weekly Cabinet meeting.
Housing Minister Caroline Flint said that house prices 'at best' are set to fall by 5 percent - 10 percent this year and told her colleagues that housebuilding is 'stalling'.
The government never normally gives forward projections on the state of the housing market. The document also reveals Flint will tomorrow announce a package of measures to help first time buyers.
The document, headed 'Caroline Flint - speaking notes', had a sticker attached which said 'Papers for Cabinet meeting 13 May 2008'. It was duly photographed and distributed to a grateful media.
'Housebuilding is stalling,' she warned. 'New starts are already down 10% compared to a year ago. Housebuilders are predicting further falls.
'Having seen net additions reach roughly 200,000 in each of the last two years, the figure for 2008-9 is almost certain to be well down on that.'
The government has set a target of building 3 million new homes by 2020.
The notes also highlighted the rise in mortgage defaults, although Flint said the number of actual repossessions was still only a third of that in 1991.
'Underlying demand for housing remains high and the fundamentals of the economy are sound. But the market is being affected by the global credit crunch, which is making it difficult for many who would like to buy to do so,' the note states.
'We can't know how bad it will get. But we need to plan now to put in place effective measures against the risk that it does get worse and to prepare for the upturn.'
'But it is vital that we show at this time of uncertainty that we are on people's side,' the note adds in bold type, with the last three words underlined.
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