Much of today’s focus has been on Budget headlines and little comment has been made of the detail supplied by the Office for Budget Responsibility (OBR), particularly about its view of what is likely to happen to the property market over the next 36 months.
According to the OBR the future looks bright and forecasts a dramatic increase in stamp duty receipts by 2016, when it expects the Treasury to receive £11.1 billion a year, nearly double the current level of around £6 billion.
This suggests the OBR is expecting housing market to spring back to life in 2013, with a 19% rise in transaction levels and a further 14% increase in the number of sales in 2014.
This is based on the OBR’s expectation of an easing in credit conditions in 2013
The downside is the OBR has downgraded its housing price forecast expecting prices to rise by only 0.5% next year. This is in line with independent forecasts published this year.
Looking ahead the picture is even better as prices are predicted to pick up more strongly in 2014, along with further strong rises in transaction numbers.
Let’s hope the OBR is right with its predictions. The success of this budget clearly rests on the generation of extra Stamp Duty suggesting the Government has put a lot of faith in the OBR's assessment.