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Revised Forecasts Suggest an Optimistic Property Market in 2024

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    OBR’s Spring Budget Statement Offers Good News for Property Investors

    Chancellor Jeremy Hunt delivered the Spring Budget this week, and this occasion is always accompanied by a complete statement from the OBR (Office for Budget Responsibility), including their economic and fiscal outlook for the coming year and near-term future.

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      OBR Revises Forecasts, Offering Insight into 2024 Buy-to-Let Market

      The OBR has revised their November forecasts for 2024 and the coming years to reflect a more optimistic outlook for the property market based on its up-to-date research and data.

      While the Spring Budget was considered a missed opportunity to provide more investment incentives by many in the property industry, the accompanying OBR statement can give more insight into the oncoming economic conditions.

      The statement has a section dedicated to credit conditions and the UK buy-to-let housing market, giving insight into the body’s outlook for this sector.

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      Housing Market Transactions Likely to Recover Earlier

      In Q3 of 2023, when the interest rate rose to its current level, housing transactions dropped to 256,000, more than 40% lower than the post-pandemic peak. According to the OBR, there are signs that demand is beginning to recover due to mortgage rates for new mortgages falling in anticipation of a lower interest rate.

      In an optimistic turn, the OBR revised their forecasts from November. While they previously stated that residential property transactions are likely to drop by 7%, now they believe that the figure will be broadly flat in 2024.

      They predict that transactions will completely recover and return to pre-pandemic levels in 2025. This is two years earlier than the November forecast stated, showing a big turnaround in sentiment.

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        Brighter Outlook Predicted for UK House Prices

        In terms of house prices, the outlook is much better than the previous forecast, although growth is projected to remain stunted this year. While the November forecast stated that property prices would drop by 5% this year, the new prediction is that they will dip by just 2%, less than half the previous forecast.

        The forecast has changed to this degree due to the OBR’s mortgage rate forecast. As mortgage rates are anticipated to fall, they expect house prices to grow by 2% in 2026 and 3.5% in 2027 and 2028.

        However, in the coming years, the OBR predicts that the average house price will surpass £300,000 by 2029, exceeding the previous peak of £285,000 in Q1 of 2027.

        Explore the UK property market in greater detail with our 2024 buy-to-let area guides:

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        Jessica Ferris

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        Jessica is a property content writer at RWinvest. Keeping a close eye on the UK property market, Jessica helps our readers stay informed and up to date on the latest market news and statistics.