500,000 house sales to be 'lost' due to Covid-19 outbreak

The Government says home buyers and renters should, where possible, delay moving to a new house while measures are in place to fight coronavirus.

Based on the assumption that the current lockdown will remain in place through April and May, with a gradual lifting through June, the firm predicts that nearly 526,000 sales will be “lost”, with less than half of these carried into 2021.

Despite this, Knight Frank forecasts mainstream UK house prices to fall by just 3% in 2020, with prices in prime central London remaining unchanged following a 25% repricing since 2014. The firm expects prices to recover sharply in 2021 – citing an 8% growth for prime central London prices for next year.

Liam Bailey, global head of research at Knight Frank, commented: “The underlying economic forecast we have adopted points to a contraction of GDP of 4% in 2020 and growth of 4.5% in 2021. The actual outturn will be determined by the timeframe imposed by the lockdown.

“The housing market was in a strong position in January and February. 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. While we expect a revival in activity to continue, with volumes next year expected to be 18% 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.

“For the government to see a full recovery of the market, with all of these “lost” sales carried forward, there will be a need for substantial incentives to ease market liquidity - including a reduction in stamp duty.”