How will house prices be impacted by the coronavirus? (June 2020)
We take a look at some of the major players in the market to see their view.
Savills forecasted an initial steep decline but were more upbeat about the years ahead. The estate agent’s analysts say mid-term price growth will be an average of 15 per cent over the next five years, with prime central London leading the recovery.
“The EY ITEM Club expects house prices to stabilise towards the end of the year and then start recovering gradually as the UK’s economic recovery gains traction, the labour market starts to recover and consumer confidence improves,”
“Very low borrowing costs should also help matters with the Bank of England unlikely to lift interest rates from 0.1 per cent until well into 2021. Even so, we expect house price gains to be no more than two to three per cent in 2021.”
In Lloyds’ base case scenario house price growth will be two per cent in 2021, rising to 2.5 per cent in 2022. This would be a jump of 0.7 per cent between 2020 and 2022.
The bank also modelled different outlooks depending on how the pandemic ultimately impacts the economy which is too early to tell.
The most optimistic outlook would see house prices rebound to grow by 6.8 per cent in both 2021 and 2022.
Lloyds’ severe downside modelling showed that house prices could plunge 10.9 per cent in 2021 and a further 12.9 per cent the following year.
Nationwide says UK house prices could rebound after the coronavirus lockdown eases, after they grew at the fastest pace since 2017 before the crisis.
And Nationwide warned the medium-term outlook is “highly uncertain”. Much will depend on the performance of the wider economy,”
However, they comment that measures such as £330bn in business support and the government’s job retention scheme could keep borrowing down and allow UK house prices to bounce back.