JLL has revised its house price forecasts with a 1.5% decline anticipated in 2021, following the end of the stamp duty holiday, as unemployment and affordability pressures bite.
The agent is predicting growth of 3.5% in 2020, followed by a drop next year and growth to follow in 2022.
It compares with previous predictions of an 8% UK house drop this year, in May, early into lockdown before the government raised the threshold for stamp duty payments to £500,000.
JLL said annual transactions will drop to 1m this year, down from the pre-Covid forecast of 1.25m. It says there will be 700,000 lost sales between 2020 and 2022, with first-time buyers and equity-rich families dominating the market.
Over the next five years to 2025, it expects an 18% rise in house prices, compared with a 10% growth in rents.
UK rental changes will be less dramatic, with growth of 1.5% this year, followed by a decline of 1% next year and a return to growth in 2022.
Nick Whitten, head of UK living research at JLL, said: “The global pandemic has left the housing market facing some headwinds in the short term, which will put some downward pressure on house prices.
“We may be changing the way we work and the way we play, but the one certainty remains – that we need places to live – and this is something that is going to have a huge effect on the market as buyers and renters alike, change their living requirements.”