The Office for Budget Responsibility – a Treasury department operating independently from the government – released its central forecast for the UK housing market in the paperwork following yesterday’s Autumn Statement.

According to the OBR, house prices are expected to grow by a modest 0.9 per cent in 2023 but then face a significant downturn, decreasing 4.7 per cent in 2024. This will bring the price of the average UK home to a circa £266,000 in the final quarter of 2024.

The OBR’s forecast outlines an overall decrease in nominal house prices by 7.6 per cent from their peak in the fourth quarter of 2022 to their lowest point in the final quarter of 2024. Looking beyond the immediate downturn, the OBR expects a gradual recovery in the housing market. 

House prices are projected to slowly regain their late 2022 peak levels by the second half of 2027 and are predicted to rise 6.4 per cent above these levels by the end of the forecast period.

There was disappointment amongst the property industry at the lack of direct assistance for the housing market in yesterday’s statement from the Chancellor.

Mortgages for Business managing director Gavin Richardson says: “We wanted to see Capital Gains Tax relief being made available for landlords when they sell a property to a sitting tenant or first-time buyer — and then invest in a new property to let. That hasn’t materialised. Landlords needed the Stamp Duty Land Tax surcharge reviewed.  They didn’t get it.  And landlords needed Mortgage Interest Relief reviewed.  Didn’t happen. 

“Without these changes, the private rented sector — which could help provide more homes while there is still an insufficient number to meet demand — continues to be damaged by the lack of long-term planning and collaboration.” 

Mark Harris, chief executive of mortgage broker SPF Private Clients, says: “The Autumn Statement really was a missed opportunity, particularly as far as first-time buyers are concerned. The Chancellor could have made more effort to help those struggling to get on the ladder, making it easier and cheaper to buy, perhaps via stamp duty reform. 

“There has been no replacement for Help to Buy and while we welcome the extension of the Mortgage Guarantee Scheme by 18 months, this only helps a relatively small proportion of movers because loans are restricted to four and a half times income and not all lenders participate.

“The main issue for the housing market and wider economy is that transactions are 20 per cent down this year, with home sales set to be at the lowest level in a decade. This impacts not just those working directly in the industry – the estate agents, mortgage brokers, removals people etc – but also many tradespeople. A more fluid housing market is good for the economy and more needs to be done to stimulate activity.”