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OBR: Era of ‘massive’ UK house price rises nearing end

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

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

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

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

“Those forces driving [house prices] up are going to be much weaker, I suspect, in the next 40 years than they have been in the past 40 years,” he said in a speech at the Economic Statistics Centre of Excellence’s conference in London reported by Bloomberg. “If anything, this unusual age of massive house price rises may be nearing an end.”

Miles said house prices had risen particularly quickly in the UK compared with other countries because it had suffered from a weaker housing supply and a bigger fall in real interest rates.

The pressure for more houses would ease as the population grew more slowly, added the economist, a member of the OBR’s budget responsibility committee, where he takes the lead on economic analysis.

The housing market has recently moved up the agenda for the main political parties, with the Labour leader, Keir Starmer, saying on Wednesday that he believed property prices should come down to make homes more affordable. He also accused the Conservatives of killing the dream of home ownership and said his party would be “the builders, not the blockers”.

Meanwhile, it has been widely reported that Rishi Sunak is considering bringing back help to buy – a 2013 Tory policy that only recently ended – to win votes at the next election.

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