April 7th, 2020
House sales in the UK are expected to fall this year, as the Covid-19 pandemic put the property market into deep freeze.
According to Knight Frank, if the current lockdown due to the Covid-19 pandemic continues in the UK for the next couple of months, the number of residential sales across the U.K. is estimated to fall 38% year-over-year in 2020. Knight Frank expects the number of sales to drop from 1,175,000 to 734,000 this year.
Knight Frank expects the house prices to fall by 3% in 2020, but then bounce back by 5% in 2021. House prices in central London are expected to remain stable in 2020 and to increase 8% in 2021. Knight Frank’s forecasts are based on the assumption that the British economy will shrink by 4% in 2020 before growing by 4.5% next year as the pandemic recedes.
Liam Bailey, the global head of research at Knight Frank, said: “Once the current crisis passes and activity begins to resume, we have to expect weaker economic activity in the first half of 2020, the dislocation in the jobs market and weakened consumer sentiment will impact on prices – however, the relatively finite timespan of the crisis means declines will be limited,”
Estate agents say their businesses have all but collapsed. Lucy Pendleton of agents James Pendleton said: “Even before an outright housing market freeze was declared, we had been forced to furlough more than half of our staff. Last week the number of sales being agreed was down 84.2% annually, exchanges were down 66.6%, the volume of offers had fallen 70% and viewings had ceased altogether.
However, Ms Pendleton is hoping the situation will change soon: “The housing market will come roaring back to life as soon as the lockdown ends, aided by interest rates that are significantly lower than when it began.”
