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UK house prices will fall by 10 percent when compared with the end of 2022, the Office of Budgetary Responsibility (OBR) has predicted. The strain on the housing market comes amid economic turbulence in the UK, with inflation and high-interest rates knocking consumer confidence.

The OBR’s document on the UK’s fiscal and economic outlook for March stated: “Our central forecast is that house prices fall by 10% from their high in the fourth quarter of 2022, a 1% point larger fall than in our November forecast. Property transactions are expected to drop by 20%.”

“Leading indicators from Halifax and Nationwide suggest that house prices have already fallen by 3% to 6% between their peak in the middle of 2022 and February 2023.

“Low consumer confidence, the squeeze on real incomes, and the expectation of mortgage rate rises to come are expected to contribute to continued falls in house prices and a reduction in housing market activity.”

However, the OBR’s forecast also says that they will return to their 2022 levels within a few years as the wider economy recovers.

The news comes as Chancellor Jeremy Hunt announces his Spring budget statement to the House of Commons.

He announced that the UK will avoid a “technical recession”, but added that economic activity will still shrink by 0.2 percent in 2023.

In 2024, the economy is set to grow by 1.8 percent, and then 2.5 percent in 2025.

Britons are still grappling with higher mortgage rates following the mini-budget in September during Liz Truss’s tenure as Prime Minister.

The Financial Conduct Authority (FCA) has said that approximately 200,000 borrowers are now behind on their mortgage payments as of June 2022.

It is thought that another 365,000 could face problems making payments by the end of June 2024.

More to follow…