The Office for Budget Responsibility (OBR) has released its central forecast for the UK housing market, projecting a nuanced trajectory for house prices in the coming years.
According to the OBR, house prices are expected to grow marginally by 0.9% in 2023 but then face a significant downturn, decreasing by 4.7% in 2024.
This decline is anticipated to bring the price of the average UK home to a low of approximately £266,000 in the final quarter of 2024.
The OBR’s forecast outlines an overall decrease in nominal house prices by 7.6% from their peak in the fourth quarter of 2022 to their lowest point in the final quarter of 2024.
This reduction is slightly less severe than the 2.4 percentage point drop previously anticipated in March 2023.
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 forecasted to rise to 6.4% above these levels by the end of the forecast period.
