Strutt & Parker is warning that in a worst-case scenario house prices in some locations could drop 10 per cent this year - although most areas will see less dramatic movements.
The potentially largest falls are in prime central London where a statement from Strutts says: “The short-term impact in this part of the market could be much gloomier with drops year on year of up to 10 per cent although these price falls are likely to only be felt in very low trade environments, specific sub-markets, or with properties that have no other option but to transact at the current time.”
The agency says the best case scenario for prime central London is for its prices to stay static over the rest of this year, helped by what it calls “a positive impact” of the stamp duty holiday in this area as in the rest of the UK.
Louis Harding, head of London agency at Strutt & Parker, warns: “It remains to be seen how much a change in working patterns will impact the periphery of PCL over the next year or two; we may see a rise in lifestyle changes with more people leaving for the countryside and opting to work remotely or only commute into the city once or twice a week.”
Elsewhere in the UK, the estate agency - which works with economic forecast company Volterra - says it is expected a best case scenario for house prices of a one per cent drop and a worst case possibility of a seven per cent fall this year.
Guy Robinson, head of residential agency at Strutts, says some pockets of the country have seen dramatic increases in demand - he cites the Cotswolds, the South West and coastal towns, where the pandemic seems to have accelerated demand from discretionary buyers who are keen for a new lifestyle.
But he adds: “In other less buoyant markets we are seeing small price corrections, as sellers seek to capitalise on demand that may not be there tomorrow, due to fears of a second wave or Brexit impacts.”