Property prices in the corona crisis - recession in the market?

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The pandemic caused by COVID-19 has a massive impact on financial markets and the economy worldwide. Many investors, property owners, potential home buyers and landlords are therefore asking themselves: Is the corona crisis also affecting the real estate market? Are property prices rising or falling due to the corona-virus? Read more about this here at HousingAgent.com

1. Are property prices falling as a result of the corona crisis?

2. Property price development for residential real estate due to the corona crisis

3. Property price development for commercial real estate due to the corona crisis

4. Should I wait with the purchase/sale of my property?

5. How property sales work in the corona crisis?

1. Are property prices falling as a result of the corona crisis?

According to current information, no unusual developments have been noted yet. The Corona pandemic leads at short notice to shifts of purchase conclusions, on a long-term basis it will, however not reduce the housing demand. For many years, the demand for living space has exceeded the scarce supply of real estate in many cities and regions. This fundamental trend will not change significantly even in the current situation, as the reasons for the excess demand will continue to exist. The strong demand for residential space in recent years is due to population growth and the continuing influx into metropolitan regions and medium-sized cities. This has led to a significant increase in the prices of properties for sale and rent. New construction activities were also unable to meet the high demand. The demand for residential space will not decrease even in the face of the corona crisis - because people will always be in need to have a roof over their heads. The reason why the corona-virus crisis does not seem to have had much impact on property prices at the moment is relatively simple: real estate does not lose its attractiveness for investors in these times. A home can still be considered a stable investment in times of crises.

2. Property price development for residential real estate due to the corona crisis

The strong demand for residential space in recent years is due to population growth and the continuing influx into metropolitan regions and medium-sized cities. This has led to a significant increase in the prices of properties for sale and rent. New construction activities were also unable to meet the high demand. The demand for residential space will not decrease even in the face of the corona crisis - because people will always be in need to have a roof over their heads. It is not yet foreseeable that property prices will fall as a result of the Corona crisis, given the current market situation. However, it is only possible to estimate how prices and the number of sales transactions resulting from COVID-19 will develop in the second or third quarter of 2020. At present, however, it appears that the property market will remain stable in terms of prices despite the corona crisis, particularly in the major cities. Especially in times of crisis, real estate is once again proving to be a safe investment.

3. Property price development for commercial real estate due to the corona crisis

Commercial real estate prices are also currently still stable. However, the individual sectors have been affected by the pandemic to varying degrees. While the hotel, catering and retail sectors are having a harder time in the corona crisis, the demand for storage space and warehouses could grow. In view of the long supply chains through several countries, the tendency of manufacturing companies to set up their own warehouses could in fact increase, thereby boosting the market.

Normalization for the office property segment

By contrast, a temporary downturn in the market for office properties could lead to a normalization. So far, demand has been extremely high at many locations and the market has been correspondingly tense. Under certain circumstances, a growing vacancy rate could now lead to renewed movement on the market. However, like the real estate market as a whole, the office segment reacts to macroeconomic changes only with a time lag. What could happen in the short term: It is possible that fewer rental agreements, especially long-term rental agreements, will be concluded for the time being.

4. Should I wait with the purchase/sale of my property?

Understandably, some owners and potential buyers are currently uncertain whether a property investment makes sense. From our point of view, however, we can overcome these concerns: In view of the largely unchanged market situation at present, there is no economic reason for investors and owners not to buy or sell a property. No change can be observed at present in the low interest rate level either. For investors and potential buyers, the attractiveness of real estate is therefore unbroken.

In the following section, you will learn how a property sale currently works:

5. How property sales work in the corona crisis?

The crisis caused by COVID-19 raises the question for many real estate owners whether a property sale can be carried out safely at the present time. Real Estate Agents around the world should work with digital tools at its disposal to handle house sales even when personal inspection of a property is no longer possible:

COVID-19 and real estate: Virtual viewings with Matterport Physical viewings of properties have become almost impossible due to the corona crisis. Understandably, neither seller nor buyer want to face the risk of infection. But agents who work with a Matterport, this is no longer an obstacle to selling a house. With the help of a modern 360° camera, a virtual 3D image of the property is created, which then allows you to view the property as if you were there - all from the comfort of your own home. For this purpose, a single shoot of the property needs to be completed by a real estate agent before you approve it for online upload.

Perfect overview thanks to impressive drone recordings In addition to the virtual tours, real estate agents also offer you the opportunity to present aerial views of the property when marketing with an agency. After all, it is not only the features of the property that are decisive for buyers, but also its location. Agents who work with FairFleet, it is possible to market your property using impressive drone recordings. With the help of such photographs, you can also provide potential buyers with a perfect overview of the location and draw attention to nearby hotspots such as schools, shopping centers and infrastructures.