A fall in house prices as lockdown continues

by Alia Khan, Consultant

The impact of the lockdown measures taken by Government to contain the spread of the coronavirus started to filter through to the housing market in April, ‘with average prices falling by 0.6% compared to March’, says Russell Galley, Managing Director at Halifax. He does, however, maintain confidence in the health of the housing market in the long-term.  

Global property consultancy Knight Frank have echoed this and said, ‘a decline of 7% in UK prices and 5% in prime London and prime regional prices will be experienced through 2020’. With much of the decline already taking place between March and May, it is expected to continue to decline, should lockdown measures stay in place. Knight Frank do not expect the effects to last beyond 2020.  

The fall of house prices correlates with the number of transactions taking place in the market, thus the rate of recovery in house prices will be relatively speedy. Savills reports that although the housing market and the industry as a whole is currently on hold rather than cancelled, it does mean that ‘if transactions were to return to 60% to 80% of normal levels by January 2021 and return to normal levels by May 2021, we could see between 1,122,000 and 1,166,000 sales in 2021.’  

This comes as positive affirmations for the many large developers who have decided to reopen their construction sites in an effort to minimalise the effects on the housing delivery as much as possible for this year.  

With the recent Government announcement to ease restrictions on house sales and reopening of estate agents, it offers a glimmer of hope for the health of the housing market this year. Could this mean that a further fall in house prices can be avoided?