The number of home sales in the UK is forecast to drop 38% this year, with more than half a million sales lost as a result of the coronavirus pandemic.
Knight Frank has axed 526,000 sales from its expectations for the year, dropping to just 734,000 transactions.
The forecast assumes the current state of lockdown until June, with the housing market effectively frozen by an inability to value properties and provide mortgages, alongside government mandated lockdown.
The figures replace previous estimations of 1.26m, up from 1.18m last year, with an abrupt halt to sales in the short-term and an uptick in the final half of the year.
Knight Frank anticipates a rebound in 2021 with nationwide sales hitting 1.39m, almost double 2020 and up 18% on 2019 levels.
London transactions are forecast to drop from 82,000 sales last year to 53,000 this year, bouncing back with 103,000 in 2021.
Liam Bailey, global head of research at Knight Frank, said: “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.”
Knight Frank predicts house prices will drop by 3% in 2020 and pick up in 2021 with 5% growth. In London, prices will remain unchanged in 2020 and rise by 8% in 2021, following dips last year.
“Once the current crisis passes and activity begins to resume we have to expect weaker economic activity in the first half of 2020,” added Bailey. “The dislocation in the jobs market and weakened consumer sentiment will impact on prices, however the relatively finite timespan of the crisis means declines will be limited.”
