How will Reeves’ budget affect the housing market? The Office for Budget Responsibility forecasts that the average house price in Britain will increase by £33,000 by 2030. The forecasts show that the average house price will reach £305,000 in 2030. Prices are expected to start rising by an average of 2.5 per cent from 2026.
According to Land Registry figures houses are currently selling for an average of £271,500. Prices have increased by around 12 per cent in the last four years. In addition to future house sales, the OBR has also downgraded its forecasts for the number of new homes being built.
The OBR expects this to increase to around 1.3 million in 2029, from 1.1 million property transactions in 2024. This is 155,000 fewer transactions than in March. The OBR also expects the number of new homes built to be 10,000 fewer than in March
Experts point out that the government’s tax policies have hit the housing forecasts from behind. The Chancellor has announced two new property taxes. Reeves announced that landlords who earn rental income will be charged more tax from April 2027. Landlords will have to pay 2 percentage points more than normal income tax rates.
Another announcement is the introduction of a council tax surcharge for homes over £2 million. This is in addition to the current council tax. The annual tax on these homes is £2,500. Above £5 million, a charge of £7,500 will be levied. The government estimates that less than 1 percent of homes in England are worth more than £2 million.
