Monday 7 September 2020 12:01 am

UK house prices: Growth to remain 'muted' after coronavirus lockdown

UK house price growth is expected to remain muted this year while transactions could plunge despite a bounce back in demand following the lifting of coronavirus lockdown restrictions.

The latest research by estate agent Knight Frank forecasts that UK house prices will grow two per cent this year.

Read more: FTSE 100 jumps as homebuilders cheer surge in UK house prices

However both prime central London and prime outer London house prices have been predicted to drop three per cent. 

Meanwhile property transactions are expected to fall 15 per cent compared to 2019. The month-on-month decline has climbed from a low-point of minus 57 per cent at the hight of the coronavirus lockdown in April.

The UK housing market was brought to a standstill for eight weeks due to the lockdown, but has since bounced back with the help of a stamp duty holiday as part of government economic stimulus measures. 

“August was unseasonably busy and the fourth quarter could benefit from a similar trend,” Tom Bill, head of UK residential research at Knight Frank, said. 

Bill added: “While price growth is likely to be curbed by a stamp duty surcharge for overseas buyers next year in prime central london, we would expect stronger upwards pressure on prices to follow.

“Prime outer London and prime regional markets will continue to benefit from stronger demand for outdoor space into 2021. 

Read more: UK house prices recover from lockdown to hit all-time high in August

“Meanwhile, we expect price growth to remain more muted in UK mainstream markets, with the ending of the stamp duty holiday compounding any economic uncertainty as the longer-term financial impact of the pandemic becomes clearer.

“Finally, we expect house price growth in the UK to become more subdued in 2024, the year of the next scheduled general election.”