According to the latest analysis from the Office for Budget Responsibility (OBR), a pivotal moment is approaching for those considering investing in property.
The OBR, the Government’s independent economic forecaster, has made a significant prediction for the housing market. They anticipate that the best time for house buyers to make their move will be in early 2025. This period is expected to mark the lowest point in property prices, with the average price dropping to £266,000. This represents a 7.6% decrease from the peak prices observed in the final quarter of 2022.
The Rise and Fall of Property Prices
This forecast suggests a temporary dip in property prices, offering a potential window of opportunity for buyers. The OBR expects a gradual recovery post-2025, with prices surpassing the 2022 peak by the second half of 2027. By the end of 2029, the market is projected to see a 6.4% increase in prices compared to 2022. This fluctuation indicates that the window for buying at lower prices might be brief.
Market Stability and Predictions
Despite fears of a housing market crash, the market has remained stable. Jeremy Leaf, a former chairman of the Royal Institution of Chartered Surveyors (RICS) and a north London estate agent, observes that his clients, particularly those buying flats and shorter-term properties, are the ones most sensitive to these price changes. Leaf’s perspective highlights that the market’s stability, while better than expected, still presents a mixed scenario for buyers and investors.
Current Market Conditions
As of September 2023, the average house price in the UK stood at £291,999, as reported by the Office for National Statistics. This figure marks a negligible fall of 0.1% from the previous year. The market’s resilience is attributed to factors like high wage growth, decreasing mortgage rates, and an influx of cash buyers. However, the market’s vitality isn’t solely reflected in house prices.
Transactions as a Health Indicator
Tom Bill, head of residential research at Knight Frank, suggests that the number of property transactions is a more accurate measure of market health. In September 2023, the transaction count was 92,600, which is 19% lower than the previous year and a 2% decrease from August 2023, as per HM Revenue and Customs (HMRC) data. This decline hints at a market operating below its full capacity.
Government Interventions and Speculations
Prior to the Autumn Statement, there was speculation regarding government actions on stamp duty and support for first-time buyers. While there were no significant changes in this area, the government did extend the mortgage guarantee scheme, which offers 95% loan-to-value mortgages to first-time buyers, until June 2025.