_Budget 2017: The figures

Often some of the most interesting data which is released around the time of the Budget can be found in the policy costings and economic forecasts issued by the Office for Budget Responsibility (OBR).

November 22, 2017

Among other things, this gives a good guide as to the government’s views on the future direction of the UK housing market.

Compared to the guidance issued in March, the OBR has made a number of revisions to its November forecasts, noting that both house price growth and tax receipts are expected to be lower than originally forecast.

Looking first at house prices, the OBR expects values will end 2018 up by 3.1% annually, before growth eases to 3.0% in 2019 and to 2.9% the following year. House prices are expected to rise by 15% between the second quarter of 2017 and the first quarter of 2022, the OBR says, compared to 22% in March. The OBR cites a fall in expected growth in real incomes as the primary reason for the slowdown.

The forecast for residential property transactions from the OBR is below.

Additionally, the OBR revised its forecasts for Stamp Duty receipts down, as show in the chart below. Stamp Duty Land Tax (SDLT) from residential properties is forecast to raise £9.6 billion in 2017-18, rising to £11.7 billion by 2022-23. Revenue from second homes and buy to let purchases is expected to contribute between 23% and 24% of the total annual receipts in any given year.

A revision of SDLT revenue forecasts is to be expected, given the abolition of Stamp Duty for First Time Buyers up to £300,000 announced by the Chancellor, while those paying up to £500,000 will only be charged on the part of their purchase over the new threshold. It is expected that this measure will cost the treasury £3.2 billion over the next five and a half years.

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