House prices will fall by 9% by 2024, OBR predicts

House prices will fall by 9 per cent by 2024 thanks to high interest rates and the economic downturn, the Office for Budget Responsibility (OBR) has predicted.

It marks a reversal in a trend which saw house prices rise by 15.5 per cent in the year to July, with an increase now not forecast to happen until 2025.

Living standards will also fall by the greatest amount since records began, the OBR has predicted.

In forecasts produced alongside Jeremy Hunt’s Autumn Statement, the OBR said living standards will fall by 4.3 per cent in 2022/23. However, it has said this fall would have been far greater without the financial support announced by the government.

The fall in living standards over the next two years will mean the progress of the last eight years will be wiped out, the OBR said.

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The chancellor also announced the energy price cap will increase from £2,500 to £3,000 a year for a typical household, a move the OBR said would add 1 per cent to inflation.

Filled with spending cuts and tax rises, Hunt’s statement also included an increase to benefits in line with inflation and a maximum increase of 7 per cent in social housing rents.

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A greater share of household income will also be spent on essentials such as energy and food “as their prices have risen quickly and there is limited scope to substitute away from them,” the OBR’s report said.

Campaigners have warned the social housing rent increase will “inflict hardship on those with the least political influence and lobbying power”, while Big Issue founder Lord John Bird said “the policies announced will only serve to push even more people into poverty and worse, onto the streets.”

Read more of the Big Issue’s coverage of the Autumn Statement:

• What will Jeremy Hunt’s Autumn Statement mean for me?
• Jeremy Hunt’s Autumn Statement will push more into poverty, says Big Issue founder John Bird
• Social housing rent rise cap still ‘inflicts hardship’ on most vulnerable, say campaigners