London prices leap from boom to bust

The coronavirus extinguished a nascent surge in London house prices in Q1. Instead, housing demand in the capital collapsed during lockdown, and has been comparatively slow to return. That underperformance is likely to continue in the near-term, as virus restrictions suppress the advantages of urban living. But while London house prices are likely to fall this year, we don’t expect a collapse. Transactions are likely to perform poorly though, as uncertainty, lender caution and higher unemployment weigh on demand.