Housing market tail risks recede

Lockdown slammed the brakes on activity and house price growth, but policy interventions have cushioned the blow for housing. As a result, our initial fears of a house price collapse have waned. That said, we still expect house prices to fall 3.5% in 2020, before reversing that dip in 2021. Meanwhile, as the economy restarts, housing transactions and construction will see a quick initial recovery. But the lasting impact of the coronavirus on the economy means that both will struggle to reach their pre-virus levels by the end of our forecast horizon.