House prices set to fall by 4.7% next year – OBR

House prices set to fall by 4.7% next year – OBR

9:45 AM, 23rd November 2023, About 6 months ago 8

Text Size

The UK’s average house price will fall by nearly £25,000 in 2024 – and won’t recover their 2022 house price high until 2027, it has been revealed.

The data from the Office for Budget Responsibility (OBR) also warns that house prices would drop by 4.7% next year – that’s after a modest 0.9% rise this year.

It said that price recovery would take three years, but homebuyers will be dealing with an average mortgage rate of 5%.

The research comes after Chancellor Jeremy Hunt’s Autumn Statement which was aimed at helping the economy with tax cuts for businesses and workers.

Indicators point to the house market remaining weak

The OBR goes on to say that various indicators point to the house market remaining weak which will lead to property transactions to fall as the market continues cooling.

It says: “We expect housing transactions to fall by 6.9% in 2024, a 1.9% steeper decline than in our March forecast of 5%.

“We then expect housing transactions to steadily return to growth from the final quarter of 2024, returning to pre-pandemic levels in the first quarter of 2027.

“Our central forecast estimates that house prices will grow by 0.9% in 2023 and then fall by 4.7% in 2024.

“This would be consistent with the price of the average UK home reaching a low of around £266,000 at its trough in the final quarter of 2024.”

The ‘peak to trough’ decline in house prices

The OBR highlights that the ‘peak to trough’ decline in house prices will be 7.6% – which is 2.4% higher than the organisation predicted in March.

It adds: “We then expect house prices to recover slowly, reaching their late 2022 peak levels in the second half of 2027 and rising to 6.4% above this level by the end of the forecast.

“The outlook for house prices is particularly sensitive to changes in interest rates and household income growth.”

Mixed prediction for the future of the UK’s economy

There’s also a mixed prediction for the future of the UK’s economy with a prediction it will shrink by 0.6% this year – up from a 0.2% forecast in March.

On top of that, economic growth has been downgraded for the next three years with the OBR predicting the economy will grow by 0.7% next year.

Then in 2025 it will grow by 1.4%, and in 2026 by 1.9%.

On inflation, the OBR says it will be ‘more persistent’ than had been thought previously.

Inflation is not expected to reach the Bank of England’s 2% target until 2025 – that’s a year later than has been forecast.

Share This Article


dismayed landlord

10:25 AM, 23rd November 2023, About 6 months ago

So precise!! 🤣🤣

Dylan Morris

10:29 AM, 23rd November 2023, About 6 months ago

I remember in April 2020 when the Bank Of England predict house prices would fall 16% during the next 12 months. They actually went up 9% 😂

paul fenton

10:39 AM, 23rd November 2023, About 6 months ago

Is that nominal fall or after taking into account CPI ? these articles do not present the full facts . 🤣


10:41 AM, 23rd November 2023, About 6 months ago

Sounds good to me, I want to sell one in 2027 to clear all my mortgages. Well, I will only do that IF the mortgage rate is over 4%. Shame they didn't say which month however....

Graham Turrell, Landlord & Entrepreneur

11:02 AM, 23rd November 2023, About 6 months ago

It's almost impossible to comment on the OBR prediction as laid out here - without seeing the basis and rationale for the OBR's predictive figures. If anyone can post that link, I'd be grateful.

FFIW my prediction is that the small recovery we've seen this year will accelerate in 2024 with that rate decreasing/flatlining once the GE date is announced.

My take is that the property market is based on sentiment and mortgage affordability, both of which point back to the BoE BBR. Provided the predictions of stability on that front prove true and consequentily swap rates continue their downward trend, I see no major reasons for vendor alarm.

But I'd love to see the OBR's homework, and views from others here with or without the "seller's optimism bias" that I may well have! 🙂

Easy rider

12:27 PM, 23rd November 2023, About 6 months ago

£25k is much than 5%

James Vai

15:21 PM, 23rd November 2023, About 6 months ago

I can't recall when the OBR forecasts have been met!
Imo, interest rates will be coming down in Q3 24.
House prices will flatline in 24 and increase in 25, 26, 27 unless Labour get in, than down we go!

Dennis Forrest

19:57 PM, 23rd November 2023, About 6 months ago

IMO the OBR forecast is wrong. The worst I see house prices in 2024 is no change i.e. zero growth.
The reasons are first that historically 5% mortgage rates are not all that high, and future large rises unlikely. My very first mortgage in the 1960's was around 6%. Rates did for a short time reach nearly 17% in the late 1970's (fortunately I had paid most of my mortgage off by then).
The other important factor is the increase in the population. Net migration 745,000 for 2022 and still expected to be around 700,000 for 2023. These people need to buy or rent property. They can't afford to stay in hotels which in any case all affordable hotels are already full! It is common sense to think that the supply and demand imbalance will at least maintain prices.

Leave Comments

In order to post comments you will need to Sign In or Sign Up for a FREE Membership


Don't have an account? Sign Up

Landlord Tax Planning Book Now