When Covid sent the UK economy into lockdown in 2020, the government jumped in to help the property market by cutting a tax on purchases. The temporary measure triggered a kind of mania among buyers, who responded by bidding up average prices by £31,000 ($35,000) — more than double the maximum tax saving.
The frenzy echoed the buildup to the house price crash that started at the end of the 1980s, when the government announced it would cut a tax relief for couples buying property, leading to a surge in demand. The slump that followed was brutal, with the market taking almost nine years to return to its previous high.
The housing market now faces similar challenges, according to Simon French, chief economist at investment bank Panmure Gordon, who forecasts a 14% fall in house prices over the next three years. That would take values back to 2013 levels in real terms. Bloomberg Economics expects values to drop about 10% next year.
