Posh people’s estate agents Knight Frank are predicting a massive decline in house sales this year due to the coronavirus.
In a Doomsday scenario, the international property firm expects house sales to plunge 38% to just 734,000 this year – much below the expected 1.3 million deals.
The domino effect is likely to see prices fall by around 3%, but they will bounce back next year, says the agent.
Jobs depending on house sales are also at risk, such as estate agents, removal firms and mortgage brokers.
The figures are based on the lockdown lasting until early June, when some restrictions may be relaxed.
Everything depends on how long lockdown lasts
In total, the firm anticipates 526,000 sales will be lost this year.
Liam Bailey, global head of research at Knight Frank, said: “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.
Don’t move if you don’t have to
“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.”
Government advice suggests any moves involving an occupied home should be delayed by ‘amicable agreement’.
“Given the situation in the UK with regard to the outbreak of coronavirus, we urge parties involved in home moving to adapt and be flexible to alter their usual processes,” says the Ministry of Housing.
“There is no need to pull out of transactions, but we all need to ensure we are following guidance to stay at home and away from others at all times.
“Where the property being moved into is vacant, then you can continue with this transaction although you should follow the guidance in this document on home removals.”