Home sales are expected to plunge by 38 per cent if the current lockdown lasts until the beginning of the June, estate agent Knight Frank predicted.
Prices are likely to fall by three per cent.
A sharp recovery will be seen in 2021, with eight per cent of growth pencilled in for prime London homes.
However, this expansion in sales will not fully offset the losses seen this year, Knight Frank said.
The outturn will be overall determined by the timeframe imposed by the lockdown.
Less than half recovered
Liam Bailey, global head of research at the agency, said: “The underlying economic forecast we have adopted points to a contraction of GDP of four per cent in 2020 and growth of 4.5 per cent in 2021.
“Of the nearly 526,000 sales we expect to be ‘lost’ due to lockdown this year, less than half will be carried into 2021.
“For the government to see a full recovery of the market, with all of these ‘lost’ sales carried forward, there will be a need for substantial incentives to ease market liquidity – including a reduction in stamp duty.”
Knight Frank predicted that the number of tenancies agreed in the prime markets across London and the Home Counties in 2020 will be around 25 per cent below the five-year average.
Bailey added: “Once the current crisis passes and activity begins to resume, we have to expect weaker economic activity in the first half of 2020, the dislocation in the jobs market and weakened consumer sentiment will impact on prices, however the relatively finite timespan of the crisis means declines will be limited.”