The typical home will increase in value by around £33,000 between now and 2030, according to latest forecasts from the Office for Budget Responsibility (OBR). 

It predicts the average house price will rise to just under £305,000 in 2030 with prices rising 2.5 per cent on average each year from 2026.

The average home is currently selling for £271,500, according to the latest figures from the Land Registry, 

It equates to little more than a 12 per cent increase in a period spanning just over four years.

The OBR also downgraded its forecasts for the number of future house sales as well as new homes being built.

While it expects property transactions to increase from just under 1.1million in 2024 to around 1.3million in 2029, this is around 155,000 fewer transactions a year than it forecast in March.

The OBR also expects the number of new homes being built by 2029/30 to be around 10,000 fewer than it did in March.

Experts suggest government tax policy is one factor behind the downbeat housing forecasts.

The Chancellor unveiled two major new property taxes that are likely to have some impact on house prices going forward.

Rachel Reeves announced rental income landlords receive will be taxed at higher rates from April 2027.

The change will see landlords taxed at 2 percentage points above normal income tax rates. 

Basic rate tax paying landlords will see their rental income taxed at 22 per cent, up from 20 per cent.

Meanwhile, higher rate tax-paying landlords will see their rental income taxed at 42 per cent, up from 40 per cent today, while additional-rate taxpayers will be taxed at 47 per cent, up from 45 per cent currently.

Reeves also announced that from 2028, homes worth more than £2million will face a council tax 'surcharge.' 

The annual levy, which will be placed on top of existing council tax, will charge £2,500 for those worth up to £2.5million.

And the highest band of £5million-plus will be hit with a £7,500 charge, uprated by inflation every year.

While fewer than 1 per cent of properties in England are expected to be above the £2million threshold, according to government estimates, some believe it will have knock-on effects for the rest of the market.

'The property market needs less taxation not more, to encourage and enable movement,' said Colleen Babcock, a property expert at Rightmove.

'Today's announcement of a mansion tax could lead to some distortion at the top end of the market, particularly as the implementation date draws closer.

'While this likely very complex tax aims to target the £2 million and £5 million price sectors, there is an inevitable trickle-down effect for the rest of the market. 

'A slower market can affect all types of movers, from first-time buyers to key workers and families.'

Estate agent Amy Reynolds thinks the Government will face a challenge in executing its plan to hit expensive homes with a council tax surcharge.

'The practicalities are daunting,' says Reynolds, 'valuing each property accurately would be a massive undertaking and homeowners are likely to challenge, if they feel their homes have been overvalued.

'It looks more like a quiet revaluation designed to squeeze hard-working families, punish aspiration, and de-stabilise the housing market in the South East.'

Expensive homes losing their appeal

Property taxes appear to be seen as a good source of extra revenue by the Chancellor.

In her previous Budget in October 2024, Rachel Reeves added a 2 per cent stamp duty surcharge on top of the extra 3 per cent landlords already pay, adding thousands of pounds to the cost of buy-to-let and second home purchases.

This meant someone buying a second home for £500,000 can now expect to pay £40,000 in stamp duty, up from £27,500 before the autumn budget.

Someone buying a £1million property will face a stamp duty bill of £93,750 while a £2million home will command £253,750.

Meanwhile, the majority of local authorities in England and Wales have introduced a 100 per cent council tax premium on second homes.

Second homes for council tax purposes are defined as furnished properties where nobody lives, or where the owner has their main residence elsewhere.

It means a second home owner in England paying the typical Band D council tax of £2,171 is now paying £4,342.

For those who own second homes that are in a more expensive bracket, the costs are often astronomical.

For example, someone who owns a Band H home in Salcombe - a second home hotspot in Devon - has seen their council tax double from £4,716.42 to £9,432.84.

Add the new surcharge on top of that from 2028 and many owners with homes worth £2m or more could end up shelling out an extra £2,500 to £7,500 more. 

That could take council tax bills to around £17,000 a year for some owners.

Add that on top of maintenance, repairs and buildings insurance each year and it's possible that many will view these homes as a liability, not an asset.