Although prices will not crash, they are unlikely to rise significantly in the short term
House sales will drop by 15% this year and prices will be “muted” across the UK, according to Knight Frank’s latest UK residential property market outlook.
The property consultant said there were concerns about the market despite recent data showing monthly house price growth at a 16-year high, and a large number of exchanges outside of London.
Tom Bill, head of UK residential research at Knight Frank, said: “Valid warnings about the unknown economic impact of the pandemic remain.”
UK property transactions will fall by 15% this year compared to 2019, according to the forecast.
Bill said: “While unemployment will rise and some form of second wave of Covid-19 will occur, our central scenario remains that double-digit price falls will not take place. The outlook has been further boosted by the announcement of a stamp duty holiday in July.”
He added: “In relation to prices, the overall picture is broadly flat with slight upwards movement in areas with more outdoor space and greenery.”
Political uncertainty and an ever-shifting tax landscape have kept house price inflation in check in recent years, widening the scope for prices to rise, while low interest rates will limit the type of forced selling that pushed prices down after the global financial crisis a decade ago, the forecast said.
It also said while London properties would take a hit this year, with prime London markets suffering price falls of 3%, they will bounce back over the next four years, rising by at least 4% a year between 2021 and 2024.
It said houses outside London would fare better than those in the capital this year, with a 1% increase in prices expected in prime regional markets. They are predicted to reach 4% in 2021 before falling to 3% a year between 2022 and 2024, according to the forecast.
Across the UK, prices will see a 2% increase this year but will only rise by 1% in 2021.