Over third of vendors expect price falls of 6% or possibly much more

A survey of sellers by a high-end agency suggests that around a third expect price falls of six per cent or more - possibly much more - as the housing market resumes following the Coronavirus lockdown.

While 27 per cent of 450 respondents to a Knight Frank survey said they expect no change in the value of their property, another 22 per cent expected price drops of up to five per cent.

However, 37 per cent of the respondents expected either a fall of six to 10 per cent, or a still steeper decline. 

Knight Frank is warning that the economic backdrop to the housing market will worsen over the summer as weak GDP data for the second quarter of the year are likely to mean the country may have entered recession. 

However, it emphasises the differences between this downturn and the global financial crisis in 2008/09.

These include the ultra-low interest rate environment, which means fewer owners will be forced to sell due to financial pressures, and the fact house prices have been subdued or falling in many parts of the country over recent years. 

Knight Frank forecasts price falls of seven per cent across the UK and five per cent in prime London in 2020, with most of the decline having already taken place.

The agency says its survey suggests the financial impact of the pandemic has been softened by the government’s furlough scheme and other support measures, which may explain why 56 per cent of respondents said their spending power was unchanged or - for a fortunate six per cent of the population - had actually risen.

Knight Frank says that while demand has rebounded more quickly than supply since the lockdown, the balance is likely to be restored in coming weeks as more vendors list their properties for sale.

The number of London-based buyers in the week to 23 May was 28 per cent higher than the five year average. Meanwhile, the number of instructions to sell remained 68 per cent below the five-year average.