The era of ‘massive’ increases in UK house prices is coming to an end, says OBR economist | house prices

Featured Sponsor

Store	Link	Sample Product
UK Artful Impressions	Premiere Etsy Store

The era of “massive” increases in UK house prices may be about to end, according to a senior economist at the government spending watchdog.

David Miles, a member of a key committee at the Office of Budgetary ResponsibilityHe said that one of the main factors that would make runaway growth in house prices less likely was the increase in working from home.

The increase in the number of people working from home since the outbreak of the Covid pandemic has given many people more choice about where they can live.

Miles, who also served on the Bank of England’s monetary policy committee, added that slower population growth and changes in borrowing costs, meaning the end of the era of record low interest rates, were two other forces that would shape the UK property market. and prices in the coming decades.

“Those forces that drive [house prices] I suspect they are going to be much weaker in the next 40 years than they have been in the last 40 years,” he said in a speech at the Center of Excellence for Economic Statistics conference in London. reported by Bloomberg. “If anything, this unusual era of massive house price increases may be coming to an end.”

Miles said house prices had risen particularly fast in the UK compared to other countries because it had suffered from weaker housing supplies as well as a further fall in real interest rates.

The pressure for more houses would diminish as the population grew more slowly, added the economist, who is a member of the OBR’s budget responsibility committee, where he leads the economic analysis.

The housing market has recently moved up the agenda of both major political parties, with Labor leader Keir Starmer saying on Wednesday that he believed property prices should go down to make houses more affordable. He also accused the Tories of killing the dream of homeownership and said his party would be “the builders, not the blockers.”

Meanwhile, it has been widely reported that Rishi Sunak is considering bringing help shopping – a 2013 Conservative policy that recently ended – to win votes in the upcoming election.

the lender Halifax recently reported that the UK “should expect further downward pressure on house prices in the course of this year”.

However, there appears to be little agreement among experts on how the property market is currently faring, let alone what may be in store for the future. While Halifax said property prices fell last month after three straight months of growth, rival Nationwide said they got up in april after seven months of declines, suggesting “tentative signs of recovery.”

The British property market has often defied those who predicted a recession or a crash. There were predictions in 2016 that house prices would crash if the UK voted for Brexit, and then a series of fall forecasts at the start of the pandemic in early 2020, but in both cases property values ​​continued. going up.