The Office for Budget Responsibility (OBR) has forecast that house prices in the UK will fall by up to 9% between 2022 and 2024.
The OBR suggests that a combination of the following will push prices down:
Well, that's a surprise ... such an insight.
OBR actual property forecasts such growth of 11.7% in 2022 followed by a fall of 1.23% in 2023 and another fall of 5.57% in 2024. The falls in 2023 and 2024 are actually falls of 6.8% compounded, so it just demonstrates that even the OBR is not sure on how far prices could fall.
We suggest that a slowdown in first time buyer activity will add further misery to the property market as demand starts from the bottom up in a normal market cycle. We have seen it before, if there is a lack of first time buyers at the bottom of the ladder, this restricts the ability of 2nd and 3rd time buyers moving further up the ladder as they cannot sell their own ‘first time buyer purchase’. That said, many first time buyers that biught in 2020 and 2021 should have enough equity now built up to allow some flexibility in reducing their asking price, but again this may compound property price falls to more than those forecast by the OBR.
If we look back to the period 1989 to 1993, house prices in some areas actually fell by 20%. As you can see, this demonstrates that house price forecasting is not an exact science.