Since the previous Analyst our forecasts for housing transactions have been shaved, reflecting the weaker-than-expected data in recent months. However, our house price forecasts appear to be on track. We expect prices to end this year 5% lower and to drop a further 10% in 2011. The 2012 outlook, which we are including for the first time, is highly uncertain. We have pencilled in a 10% drop on the grounds that this returns the house price-to-earnings ratio (HPE) to its long-run average.
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