Prime Central On Pause

The gradual recovery that London’s prime residential real estate had been enjoying since December's general election will be put on pause amid the spread of Covid-19, according to a report Wednesday from Savills.

Property prices across London’s prime markets rose 2% in the three months to mid-March—just prior to the introduction of the government’s latest measures against the virus—according to the Savills quarterly index.

The uptick pushed annual price growth across prime London into positive territory for the first time since September 2015, the London-based real estate agency said.

On Monday, March 23, Prime Minister Boris Johnson announced that the U.K. would be locked down to combat the spread of Covid-19.

“From this evening, I must give the British people a very simple instruction—you must stay at home,” Mr. Johnson said in his statement on Monday evening.

People are only permitted to leave their homes for essential reasons including necessary shopping, daily exercise or for a medical need.

The total number of confirmed coronavirus cases globally stood at 441,187 on Wednesday afternoon, and 20,499 people have died as a result, according to the Center for Systems Science and Engineering at Johns Hopkins University. In the U.K., there have been 8,328 cases and 434 people have died.

“It seems inevitable that there will be a period of low transactional activity over the spring and summer months, so it will probably be autumn before we can understand what this will mean for future price growth,” Lucian Cook, head of residential research at Savills, said in the report.

Since December’s general election, which resulted in Mr. Johnson retaining his role as Prime Minister, the political uncertainty that had held back much of the country’s real estate market, particularly in London, has eased. The result had been increased transactions, sentiment and prices.

“Only once we see transactions pick up again, will we be able to gauge the impact which Covid-19 has had on prices,” Mr. Cook said. “Much depends on how long it suppresses the domestic and global economy, how people perceive its potential impact on their wealth over the longer term, and the extent to which they turn to bricks and mortar as a store for that wealth.”