The Chancellor, ‘Dishy Rishi’ presented his Spending Review this week and the Office for Budget Responsibility has published their latest Economic and fiscal update.
The section on housing is interesting as the Office has updated their views on both transaction numbers and prices.
House prices are expected to fall back in 2021 – by 8% perhaps, driven by end of the stamp duty holiday and the hit to household incomes from the labour market adjustment that we assume will follow the end of the Coronavirus Job Retention Scheme.
The stamp duty holiday has added further impetus to transactions, though there are reports that it is also creating bottlenecks in the system. Due to forestalling, the OBR expect the number of transactions to rise sharply in the first quarter of 2021 and then drop off sharply in the second quarter of 2021.
The OBR report said: “House prices fell briefly as the pandemic struck, but recent indicators suggest they have subsequently recovered quite strongly.
“This follows the easing of public health restrictions and the stamp duty holiday for residential property transactions that took effect on 8 July 2020.”
It’s still too early to have many industry predictions on prices for next year but I’ll add them as they are declared.