Lloyds expects house prices to fall 5% due to coronavirus

HOUSE prices are expected to take a 5 per cent hit this year due to the coronavirus crisis.

That's according to the latest data from Lloyds Banking Group, which also warns prices could fall by 30 per cent over the next three years in the very worst case scenario.

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The Group, which includes Bank of Scotland, Halifax, and Lloyds Bank, says it's working on the assumption house prices will fall this year before picking up by 2 per cent next year, and by 2.5 per cent in 2021.

Overall over the next three years, Lloyds says it's expecting prices to slide by -0.7 per cent.

But in its interim financial statement for the first quarter of the year it does model other scenarios, and in the worst case example it details prices slumping by 30.2 per cent over the next three years.

It comes as experts at Capital Economics predict housing transactions and housebuilding to drop by 70 per cent between April and June this year, as social distancing measures halt activity.

House buyers have been told to postpone moving home, where possible, during the coronavirus lockdown.

The research firm adds that it expects house prices to fall by 4 per cent this year, which it says will be the biggest fall since the global financial crisis. 

It also predicts prices will recover by 2021, but adds that house prices will still be around 4 per cent lower by 2022, compared to if coronavirus had not struck the economy.

Experts have warned the UK economy could plummet by 35 per cent this year.

While others predict the UK economy faces "two decades of tax hikes and austerity" to recover from coronavirus.

But Ben Johnston, director of property app Houso, says it's too early to say what could happen to prices.

He told The Sun: "Given that we don’t know how long lockdown will last, the outlook for the housing market in the short term at least is uncertain. For the market to thrive we need confidence and that is in short supply.

"But at the start of this year, before coronavirus took a hold, the housing market had been picking up encouragingly after years of Brexit uncertainty, which had put decisions on hold. "

Struggling households have been offered a raft of emergency measures during the pandemic including three-month mortgage holidays.

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