The negative economic impacts of COVID-19 have bypassed the housing market so far due to the extraordinary support measures put in place by the government, regulators, and banks. But while policy has probably reduced and delayed the impact of COVID-19 on house prices, it has not removed it altogether and the pandemic will take its toll in 2021. That said, the correction will be far smaller than in previous recessions. Indeed, the 5% dip in prices we now expect next year would leave prices marginally higher at the end of 2021 than they started 2020. And if there is a swift recovery in jobs as we anticipate, there is every prospect of a return to growth in 2022.
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