OBR: House prices to fall 10% by 2024
The latest forecast from the government watchdog predicts a bigger fall in house prices than previously expected.


The Office for Budget Responsibility (OBR) predicts UK house prices are set to slump this year.
House prices have been under pressure for the past six months, and now the OBR believes prices could fall as much as 10% by 2024, that’s from their fourth quarter 2022 high.
The agency was projecting a 9% decline last year, but it has upped its projection as “low consumer confidence, the squeeze on real incomes and the expectation of mortgage rate rises” weigh on the property market.
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The watchdog estimates the average property price will fall to £262,700 next year, down from an all-time high of £291,700 in the final quarter of 2022.
The OBR also expects property transactions to drop by 20% compared to their peak in the fourth quarter of 2022.
Property prices have begun to fall
Data from other house price indexes support the OBR’s projections that house prices are coming under pressure.
The latest report from the Royal Institute of Chartered Surveyors (RICS) showed that while new buyer enquiries rebounded in February from multi-year lows, they remain depressed.
Meanwhile, Nationwide reported house prices saw their biggest dip since 2012 in February.
Where next for mortgage rates?
High financing costs are one of the reasons why the property market is cooling.
As the Bank of England has hiked interest rates to try and control inflation, mortgage rates have climbed to their highest levels in recent memory.
Mortgage rates hit a peak of 6.65% in September. The average two- and five-year fixed rates are currently around 5%.
And it’s not just new buyers that are suffering. Homeowners with outstanding mortgages are also expected to see much higher borrowing costs in the near future.
The OBR now estimates rates for outstanding mortgages will reach 3.8% in 2024 before climbing back up to 4.2% in early 2027 – two times higher than what they were at the end of 2021.
While these projections are brighter forecast than the forecast the OBR published in November, when it expected rates to peak at 5% in 2024, they still imply the cost of borrowing is going to rise substantially over the coming years. This will almost certainly have an impact on UK house prices.
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Nic studied for a BA in journalism at Cardiff University, and has an MA in magazine journalism from City University. She has previously worked for MoneyWeek.
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