House prices to fall 10% from peak

The Office for Budget Responsibility (OBR) expects house prices to fall 10% from a peak seen in Q4 2022, while transactions will drop by 20% from the high seen in the closing quarter of last year, reducing tax revenues from stamp duty by £5bn next year alone. There were 1.48m transactions in 2021 and 1.26m last year. They are projected to fall to 1.09m this year and 1.03m in 2024, but to rise to 1.35m by 2027. The OBR says the decline in values and activity will be driven by “'low consumer confidence, the squeeze on real incomes, and the expectation of mortgage rate rises.” The OBR also says the average rate on outstanding mortgages is expected to peak at 4.2% in 2027, 0.8 percentage points lower than forecast in November, before falling to 4.1% at the beginning of the following year. 

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