House prices could drop 7.5% this year as the UK economy battles to fight off the damage caused by the coronavirus pandemic, according to estate agent Savills.
Savills warns that the damage done to the UK economy due to the Covid-19 pandemic will lead to a short-term deterioration in house prices, with a uniform dip set to be experienced across all parts of the country.
The estate agent made the recalculation to its residential market forecast, first published in November, following a new analysis of data reflecting the impact of Covid-19.
However, there could be a bounce-back in 2021. Savills predicts a 5% increase in house prices next year, and by 2024 house prices will have risen by 5% over the five-year period.
This forecast is lower than the 15.1% increase Savills predicted in November, reflecting a scenario presented by Oxford Economics where a downside economic scenario with a longer lockdown leads to a more persistent economic contraction, and a longer, slower recovery.
“In the short term, weak consumer sentiment will limit any bounce in activity following the housing market reopening. Over the coming years, a higher unemployment rate will impact perceptions of employment and financial security, which hold the