The impact of the coronavirus crisis on the housing market is a much-contested issue at the moment. Estate agents point to buoyant demand and a rapid bounce back in activity as market restrictions have been lifted, and decry the doom-mongers.

Undeniably, the strength of the rebound has taken many forecasters by surprise – Rightmove reported last week that prices had now risen 2.4% above the pre-lockdown level amid surging demand – and some are rapidly recalibrating their predictions.

But most economists point to the inexorable logic of the economic crisis: the collapse in GDP – 20% down in April and May; the thousands upon thousands of jobs lost; the huge uncertainty continuing to hang over large parts of the economy. Forecasters continue to predict large peak-to-trough falls in demand for homes and, consequently, prices – even if they are pushing the timing of the fall slightly to the right.

Earlier this month the Office for Budget Responsibility (OBR) released forecasts suggesting a fall of more than 8% in house prices in the year to March 2021 was most likely, though it said the drop could be as much as 16%.

Whatever happens to house prices, there is no doubt that residential transactions will fall, severely impacting residential developers. The OBR estimates transactions will fall by between 35% and 38% this year, and preliminary results from listed housebuilders are already showing the scale of lost revenue.

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