Thursday, May 20 2004

Research from estate agents Cluttons and Oxford Economic Forecasting (OEF) has found that the most likely scenario for house prices is a continuing rise until the end of the year followed by a gentle fall in 2005. They put this scenario at a likelihood of 40%.

This is due to the fact that house prices have become overvalued in past months as prices have kept on rising the report, out today, says.

Out of 5 different outcomes which they developed this one, the most likely, expects the UK and US economies to recover from their weak positions of last year and remain strong and stable for the coming five years.

The report also predicts a soft landing to the house price rise with growth slowing to 10% by the end of this year and to 3% by the end of 2005.

Other scenarios they have looked at are:

• what would happen if domestic inflation rises dramatically (8% probability)