Economists of the Government of the United Kingdom expect that the house prices in the country could drop briefly at the end of the year and the start of 2020.
Last Wednesday, the Office for Budget for Responsibility (OBR) stated: “We expect annual house price inflation to fall to just below zero towards the end of 2019.”
The OBR disclosed that “leading indicators of housing activity and prices have weakened noticeably since our October forecast,” leading to the “much weaker outlook for house prices in 2019 and 2020.”
Being a non-departmental arm of the government that was established by George Osborne, the former chancellor, way back in 2010, the OBR aims to provide forecasts independently of central government.
The forecasts for the house price came in a 205-page report that was produced by the OBR. It was published alongside the spring statement of chancellor Philip Hammond last Wednesday. The OBR did not disclose any theory as to why the conditions in the property market had weakened since October 2018 when it last released its forecasts.
As well as a decline in house prices, the OBR expects that the transactions will fall by 5.4 percent between the end of the previous year and the middle of this year.
The report disclosed: “Transactions have picked up over 2018 after a decline the year before.”
It continued: “But the latest near-term indicators of housing market activity point to a significant weakening.”
While the prices and transactions are anticipated to decline, the OBR believes that the housing market of the United Kingdom will continue to be solid over the long-term.
The OBR stated: “Beyond the near term, we expect house price inflation to pick up as a result of stronger real household income growth and continued pressure of demand on supply.”
It added: “Overall, we expect house prices to rise by almost 17% between the fourth quarter of 2018 and the first quarter of 2024 – close to household income growth over the same period. That compares with forecast growth of nearly 20% in our October forecast.”