Property transactions are set to fall by 15 per cent in 2020 compared to last year according to updated forecasts by Knight Frank.

The estate agency firm predicts that across the UK, prices look likely to show an increase of 2 per cent over 2020, before dropping back to 1 per cent growth in 2021, 3 per cent in 2022, 4 per cent in 2023 and 3 per cent in 2024. 

Cumulatively from the start of 2020 to the end of 2024 that is equivalent to a 14 per cent rise.

Knight Frank expects prime central London and prime outer London to see more short-term pain with prices dropping by 3 per cent this year.

However, it also expects the capital to see a stronger recovery, with prime central London prices forecasted to increase by 17 per cent cumulatively by 2024 and prime outer London tipped to see a 15 per cent rise over the same timeframe.

Knight Frank says that when lockdown stalled the property sales, prophecies about the housing market were understandably dire.

But since then there has been a significant change in sentiment.

Last week Nationwide said that monthly house price growth had reached a 16-year high. 

Mortgage purchase approval data from the Bank of England appears to be showing a V-shaped recovery, the estate agency says. 

In its latest forecasts, Knight Frank says: “While unemployment will rise and some form of second wave of Covid-19 will occur, our central scenario remains that double-digit price falls will not take place. 

“The outlook has been further boosted by the announcement of a stamp duty holiday in July.

“Other factors will keep upwards pressure on prices. 

“Political uncertainty and an ever-shifting tax landscape have kept house price inflation in check in recent years, widening the scope for prices to rise. 

“Furthermore, ultra-low interest rates will limit the type of forced selling that pushed prices down following the global financial crisis.

“The government also appears more interested in the wider economic benefits of a stamp duty holiday than the political benefits of successive hikes.

“In short, this does not feel like a re-run of 2008/09 for the UK property market.”

It adds: “Prices in prime central London have corrected by more than any other UK market over the last five years and we expect this to support growth in the medium term.

“Demand will be further boosted by the removal of travel restrictions on international buyers as governments continue to tackle the pandemic, which may start to happen in the fourth quarter of this year. 

“While price growth is likely to be curbed by a stamp duty surcharge for overseas buyers next year in PCL, 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. 

“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.”