Coronavirus pandemic has pushed property market recovery back to next year – Savills

It is always risky making property predictions but Savills has got its crystal ball out again to revise previous house price forecasts due to the coronavirus pandemic.

The agent had forecast last year that the prime central London (PCL) market would return to growth during 2020.

But the agent has now acknowledged that the pandemic will push that back by a year, even with the new Stamp Duty holiday.

Savills said PCL prices fell by 1.1% in the second quarter of 2020 and is now predicting a decline of 2% for this year as buyers are hampered by travel restrictions and may have had their wealth hit by the pandemic.

The recovery, it claims, will instead be next year with a prediction of 4% annual growth followed by a peak of 7% in 2022 when Brexit negotiations are expected to be settled.

It is predicting 15.7% growth over the next five years.

Savills was also less excited about the Stamp Duty holiday for the PCL market but suggested there would also be a rush to beat the new overseas buyer’s rate that is due to be introduced in April 2021.

Lucian Cook, head of residential research for Savills, said: “The modest price adjustment for 2020 reflects not only where pricing already sits relative to peak, but also the relative absence of people actually looking to divest themselves of trophy London assets.

“These factors are likely to continue to insulate this part of the market against further price falls over the rest of the year.

“Also, while the Stamp Duty holiday announced this week by the Chancellor is unlikely to have a material impact on decisions in this part of the market where values average around £4.5m, when viewed in combination with the pre-announced overseas buyer’s surcharge due to be introduced in April 2021, it may act as a fillip to market activity in the run up to the end of March.”

Others are less sure of how easy it is to predict the property market.

Marc von Grundherr, director of London agent Benham & Reeves, told EYE: “It’s somewhat difficult to predict actual house price rises or falls in percentage terms specifically – especially four years hence.

“It’s a bit like today predicting the temperature for August 21.

“We know it’s probably going to be warm but to say it will be 24.5 degrees centigrade with a light wind from the east and, later in the day, a light covering of cloud leading to a small chance of showers in the northern part of the country’ is folly really.

“The upshot is that prices will be underpinned by market fundamentals – employment, interest rates, availability of mortgage funds, sentiment and, in London especially, foreign buyer appetite.

“All things considered I see these all being broadly positive for the foreseeable.

“In other words, a ’summer’ of housing market optimism in the medium to long term.”

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3 Comments

  1. simonwilkinson73

    Hmm, with possibly 3 million Hong Kong Chinese coming over ( agents in London, Oxford and Milton Keynes reporting large numbers of new buyer registrations ) and the ability of the Govt to extend Help to Buy to second hand homes, not just new. There may still be optimism. Amazingly, with many agents are reporting record numbers of new applicants moving, as they can now ‘home work’ so demand has already soared, sale prices are very strong. Prices are now starting to go up in many areas too. BUT this has all happened remarkably quickly and isn’t yet being widely reported.

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  2. padymagic

    Brilliant

     

    24.5 degrees with a light wind.

     

    Not sure what savills are talking about though

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  3. LondonRealtor

    Optimistic at best.

    Don’t forget these agents act on behalf of the vendor, all the *research* as they say is going to be skewed in that direction. There is nothing of any benefit to a purchaser here. All very skeptical about so called research anyway, generally its total tosh, flicking through the KF wealth report the other day I noticed some of the data goes back 2 or 3 years, how is that relevant in today’s market?

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