House prices in Britain are expected to increase by as much as 3% in 2020, boosted by a sales-tax exemption and a rebound in demand following the pandemic lockdown. 

Recent data from property platform Zoopla indicated that house prices jumped 2.7% in June – the fastest pace in almost two years. The increase was driven by a restart in property market activity, as well as a stamp duty holiday rolled out by the Chancellor earlier in July, which is expected to boost prices in the coming months. 

The upbeat forecast arrives against a previous outlook for price growth to decelerate towards the end of 2020. 

In March, Britain’s housing market was frozen amid government-imposed lockdown measures to control the spread of Covid-19. Construction sites were also temporarily shut down, as employees sought to establish safe working practices. Ever since the gradual easing of lockdown measures in May, deals have slowly begun to pick up pace, boosted further by other incentives to drive growth including a stamp duty holiday. 

"The stamp duty holiday is very much a south of England, southeast of England sort of incentive," Richard Donnell, Zoopla's director of research and insight, said by phone. "The current surge will not be maintained, it will fade in the second half of the year as people who want to move now move and take the benefit."

Although the forecast has improved, the UK property market is still set to feel the brunt from the coronavirus lockdown. Sales are expected to decline 15% from 2019 levels, according to Zoopla. Nonetheless, this is still higher than the previous forecast. 

"In the early part of the Covid crisis, we thought it was looking like transactions would be down 30 per cent to 40 per cent this year," Donnell said. "Everyone in the industry has been taken aback by how resilient consumers have been and how willing they've been to come back in the market."