House prices are set to fall by 5 per cent this year and are unlikely to recover their losses until 2022, a Reuters poll of property market analysts has forecast.

In a worst case scenario, prices could drop by 11 per cent on the back of high unemployment, according to the survey of 21 strategists in the sector. 

In an earlier poll conducted in February before the pandemic hit the UK, experts forecast prices would rise by 2 per cent this year and 2.8 per cent in 2021.

Commerzbank economist Peter Dixon says: “I would expect the housing market to be a casualty of the economic scarring that will result from this recession.

“With prices already looking elevated and incomes set to be squeezed, market clearing prices can be expected to fall significantly.”

But estate agent Benham and Reeves’ director Marc von Grundherr strongly disagrees with the poll’s forecast.

He says: “A 5 per cent fall in house prices over the next six months is highly unlikely given the sharp return in market activity seen over the last few months. “Even in the face of a market lockdown and pandemic uncertainty UK house prices have edged up on an annual basis and while month to month movement has shown large declines in places, such a short term measure is far too erratic to base any long term health predictions on.  

“Such a drastic decline would require a catastrophic market collapse and that’s simply not what we are seeing on the ground and, in fact, we are seeing quite the opposite.

“Of course, the explosive tide of demand seen following the reopening of the market will subside to more regular currents of activity as the industry returns to normality. 

“However, we remain a nation of aspirational homeowners and this is yet to be dampened by Covid-19.”