- LONDON HOUSE PRICES TIPPED TO RISE: FORECAST TO DEFY LOCKDOWN AND FEARS OF COVID ‘SECONDWAVE’ WITH 2.5% RISE
LONDON HOUSE PRICES TIPPED TO RISE: FORECAST TO DEFY LOCKDOWN AND FEARS OF COVID ‘SECONDWAVE’ WITH 2.5% RISE
The latest figures paint an optimistic longer term picture for London house prices.
London house prices could rise 2.5 per cent this year, despite the lockdown and rise in Covid-19 infections.
A report by Hamptons International, published today, predicts that the “rapid recovery” after the property market reopened in May means values in the capital will exceed both the rate of inflation — which was just 0.2 per cent in August — and price rises across the rest of the country, which Hamptons forecasts at two per cent.
However, with a long and precarious winter ahead, the estate agent suggests the consequences of Covid-19 will kick in next year, with price falls of one per cent in London.
The better news is that Hamptons expects London prices to return to modest growth the year after with an increase of 1.5 per cent, and three per cent in 2023, making a four-year growth prediction totalling six per cent.
“After seven weeks of lockdown the market began to recover quickly,” said Aneisha Beveridge, head of research at Hamptons International.
“The market was buoyed by pent-up demand going back to 2016 as well as a rise in the number of households making lockdown-induced lifestyle changes, all topped off by a stamp duty holiday.
“The real challenges won’t be felt until 2021. The economic consequences from the Covid-19-induced recession will pull the housing market from its long-term growth trajectory.
“In line with a gradual economic recovery, we forecast house prices to rise again in 2022 and 2023.”
Tom Bill, head of UK residential research at estate agent Knight Frank, agrees the market has a tough few months ahead.
“The number of price reductions as a percentage of all listed properties rose above four per cent in September,” he said. “It wasn’t a significant increase but it demonstrates how there is a flicker of nervousness in the property market as summer turns into autumn.
“The Chancellor’s support package for employers announced last week will help cushion the impact as the furlough scheme ends, but the national mood is clearly turning more sober due to the possibility of a worsening economic backdrop.”
What this means is that property is selling strongly in the suburbs, as buyers ripple out of the city in search of larger homes with outside space.