Revised economic growth outlook will not underpin house prices

Yesterday, we revised up our forecasts for economic growth in the UK. Our new forecasts still leave the economy on a very weak path, which will not prevent further falls in employment and household income. As such, hopes that house prices are approaching a floor are likely to prove premature. But the upwards revisions to growth do suggest that the correction may proceed at a slower pace than seemed likely a few months ago. We have revised our house price inflation forecasts accordingly.