Estate agents Knight Frank have predicted that house sales will fall by 38 per cent this year, raising concerns around the liquidity of the UK’s property market amid the coronavirus pandemic.
The property specialists have also estimated that mainstream UK house prices will fall by three per cent in 2020, although London-based properties should only fall by two per cent. By contrast, prime central London properties are expected to retain their value throughout the year.
These estimates are based on the assumption that the lockdown will remain in force throughout April and May, followed by a gradual relaxing of lockdown rules in June.
In this scenario, the UK’s property market will see little-to-no growth in 2020, but a sharp recovery has been predicted for 2021, with prime central London properties set to rise by eight per cent in 2021.
“The housing market was in a strong position in January and February,” said Liam Bailey, global head of research at Knight Frank.
“A sharp uptick in sales and price growth was seen across the UK, with even the prime central London market seeing a reversal of a five-year long price decline.
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“While we expect a revival in activity to continue, with volumes next year expected to be 18 per cent above the level seen in 2019, this expansion in sales in 2021 will not fully offset the losses seen this year. Meaning that of the nearly 526,000 sales we expect to be “lost” due to lockdown this year, less than half will be carried into 2021.”
Bailey warned that liquidity would suffer as a result of these new market conditions, and called on the government to take action by reducing stamp duty to encourage more buying and selling activity.
Several property-backed peer-to-peer lenders have already noted the early impact of the lockdown on platform liquidity, although they added that the vast majority of property-related borrowers have been unable to keep up with their repayments.