House prices are predicted to fall in 2019, according to revised forecasts from the Office for Budget Responsibility.
The figures from the Government’s Budget watchdog, published today alongside the Spring Statement, are a change of stance from its October 2018 forecast, when values were expected to rise 3 to 4 per cent in 2019 and the years beyond to 2024.
Property experts have said that concerns over Brexit and stretched affordability have caused house price growth to flag.
Stormy outlook: The OBR says property prices will struggle this year – before recovering in 2020
However, despite the slump, the OBR goes on to predict property values to still grow over the next five years.
It says: ‘We expect house price inflation to pick up as a result of stronger real household income growth and continued pressure of demand on supply.
‘We expect house price inflation to reach around four per cent a year by the end of the forecast horizon [the start of 2024].
‘We expect house prices to rise by almost 17 per cent 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 per cent in our October forecast.’
Last September, Bank of England governor Mark Carney warned that a no-deal Brexit could crash house prices and send a financial shock through the economy.
He said that his worst-case scenario, values could fall as much as 35 per cent in the three years after the event of a no-deal.
It is believed that the forecast was based on the worst-case scenario that envisaged unemployment rising to 9.5 per cent and interest rates climbing to four per cent.
The latest ONS house price index shows that the average property value currently sits at £231,000.
It reported that the average UK home rose by 2.5 per cent in the year to December – the slowest annual pace of growth since July 2013.
The latest Halifax house price index revealed the annual rate of growth slowed in January, rising by 1.3 per cent, with monthly prices dropped 2.9 per cent – the fastest pace of decline in over eight years.
Similarly, Halifax’s rival Nationwide found in its own index at the end of last month that house prices inched up just 0.1 per cent in the year to January 2019.