The Government’s fears that house prices could drop by 10% at best were accidentally exposed today by Housing Minister Caroline Flint.
Flint's confidential notes for a cabinet briefing today were revealed after they were photographed through the clear plastic folder as she entered Number 10 Downing Street.
In the document, headed ‘Caroline Flint – speaking notes’, she said in the best case scenario prices would fall by around 5% to 10% at best and added that house building was ‘stalling’. In a further dire prediction for the residential market she added that the government ‘can’t know how bad it will get’.
She also said in the notes that the Government would struggle to hit its housing targets with new starts on housing developments down 10% compared to this time last year.
The briefing note also pointed out that the rise in mortgage defaults but reminded the cabinet that although actual repossessions are still only a third of the figure in 1991.
Flint said that the Government was helping the market through the Bank of England’s £50bn injection into the market and providing advice to people facing repossession orders but it must show ‘it is on people’s side’.
The gaffe will cause further embarrassment for a beleaguered Labour government recovering from severe losses sustained in the recent local election and the appointment of a Tory mayor.
It may also impact on Prime Minister Gordon Brown’s plans for his announcement tomorrow on his draft legislative programme for the next Parliamentary session.