However, OBR forecasts released alongside the red book were perhaps of more interest to agents and property professionals.
The OBR, which keeps an eye on the government’s own finances, said its forecast is for residential property transactions to be broadly flat during 2024.
That is a change from a previously predicted fall of 7% in November.
Property sales will then start to recover, the OBR said, reaching pre-pandemic levels in early 2025, two years before previously expected in November.
The economist said it now expects house prices to fall by 2% instead of 5% during 2024.
It is expecting house prices to grow around 2% in 2026, and around 3.5% in 2027 and 2028. That would see nominal house prices surpass their historical peak in the first quarter of 2027, according to the OBR.
The OBR said this is mainly due to its lower mortgage rate forecast. It now expects mortgage pricing to peak at 4.2% in 2027.
It said: “There are significant risks to our mortgage rate forecast, demonstrated by the large movements in bank rate expectations since November. This also poses a risk to household incomes, residential housing transactions and house prices.”
Meanwhile Paul Smith, who runs the haart estate agency among others, said the Chancellor’s measures to boost the housing market don’t go far enough.
He said: “Personally I think they’ve missed a golden opportunity to promote home ownership, especially for first time buyers, by not going ahead with plans for a 99% mortgage scheme, as had been widely touted.
“They could have also encouraged older people living in larger properties to downsize if they’d gone ahead by giving the stamp duty relief.
“In my view, both are a very big mistake that will cost the Tories dearly.”
Tim Bannister, Rightmove's property expert added: "We had hoped the government would seize the opportunity to help first-time buyers and reform the outdated stamp duty system, instead, home-movers are left with very little.
“There is a chance that the reduction in the higher rate of capital gains tax will mean some landlords to sell properties which could, in turn, increase choice for first-time buyers. Whilst any increase in supply for first-time buyers is welcome, we will have to wait to see how substantial it is, and it may also result in a further reduction in already-tight rental stock levels in the short term."
However, Craig Vile, director of The ValPal Network suggested the announcement of a cut in National Insurance from 10% to 8% could help the property market.
He said: “It will help some first-time buyers overcome lender affordability criteria.
“With inflation coming down and the prospect of lower interest rates to come, we may well see greater confidence in the market and some of that pent up demand begin to flow through.
“Aside from any specific measures to drive transactions, the outlook for the economy is brighter and that should give us all some optimism as we head into the Spring.”
.jpg){kind=avatar}
%20-%20IMAGE%20Client%20Accounting%20%E2%80%93%20what%20are%20your%20options.jpg)
.png)
.png)
.png)
%20(002).png)
%20(002).jpg)
Join the conversation
Jump to latest comment and add your reply
A total flop of a budget, all very predictable...moving bits of money around. Probably one of their last chances to improve the economy and failed. This useless Gov't will be coming to an end soon and will be replaced by an even more useless one. Oh dear.
Anyone that expected any different is a bigger clown than the people "running" the country; which I know you'd think was impossible.
The incentive to sell by decreasing the CGT by 4% isn't going to help the rental market.
Gaining one more house in the sales market means at least one person/family will lose their home. And with no incentive to invest in property as a business, private rentals will continue to decrease whilst demand for private rentals increase.
Anyone who has moved to short term let, will not necessarily be encouraged back. As if their property is in a desired area with plenty of short term demand even with the increased tax liabilities, the house has been set up for rentals and short term rentals produce much higher turnover than long term rentals so more likely to still be in profit.
Please login to comment