The UK’s pandemic house price boom is forecast to come to an end, but property prices are still expected to rise in each of the next five years. Some surveys have recorded house prices rising at a rate of more than 10% a year but the government’s official, independent, forecasters have said this will drop to 3.5% by 2026.
The Office for Budget Responsibility (OBR) also said that mortgage rates are likely to rise from record lows. Rent for tenants will also go up. It means potential first-time buyers are facing another period of difficulty if they wish to buy a home. The Covid outbreak and the resulting lockdowns led many homeowners to reconsider where they live, despite a limited number of homes on the market. The OBR said that the “race” for indoor and outdoor space, as well as stamp duty holidays, led to a huge increase in demand, sales and prices. Although the surge in values was expected to slow, prices would be higher over the next five years than the OBR forecast before the Budget in March, it said.
House price rises of 1.9% in 2024, 2.9% in 2025, and 3.5% in 2026, have been predicted by the OBR, although history shows that longer-term forecasts of house prices are more difficult to make accurately.