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U-turn on housing market forecast by government advisers

Official forecasts suggest house prices will rise for five years at least, although at well below the rate of growth seen in 2021.

The Office for Budget Responsibility says an 8.6 per cent rise is expected this year, falling to 3.2 per cent in 2022 and 0.9 per cent in 2023.

Further ahead the OBR says house price rises of 1.9 per cent will be seen in in 2024, the 2.9 per cent in 2025, and 3.5 per cent in 2026.

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The OBR - which advises the government but operates independently - also says mortgage rates are likely to rise from record lows.

As recently as March the year the OBR predicted prices would fall in 2022 before returning to growth in 2023.

It now admits this prediction was too pessimistic following the surge in property values during the pandemic and the so-called ‘race for space' as families looked for bigger homes. 

The OBR now says the boom, fuelled by the stamp duty holiday, pushed house price rises 'far beyond' what it would have expected.

The average home cost £264,000 in August, according to the Office for National Statistics, close to the record in June of £265,000. 

It meant house prices had jumped by more than 10 per cent over the year, one of the biggest rises recorded. 

The ONS says the housing market is returning to normal after a period of heightened activity during.

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