The changes that Coronavirus will leave in the real estate market
The real estate market is trying to get a positive reading of the health crisis and the economic blow expected by the coronavirus. Despite the fact that the sale and purchase operations have been paralyzed and experts assume that the house will not recover normal activity at least until the end of the year, the sector remains optimistic and trusts that the covid-19 will bring some positive changes .
Fall in prices and empowerment of the buyer: the network considers it inevitable that we see a drop in house prices. This crisis will force many to have to lower the price of their homes to adapt to new circumstances, especially if they want to close the operation as quickly as possible.
The market is already considering a decrease between 10 and 15%, although everything will depend on the depth and duration of this crisis.
Interest rates will continue to be very low: another good news is that, to deal with the crisis, central banks around the world, and as long as there are no pressures through inflation, will maintain accommodative financial conditions. Thus, interest rates in the eurozone could remain at the current historical lows of 0.0%. For this reason, the interest on loans to families and companies will continue to be low and the 12-month Euribor, the benchmark indicator for most mortgages in Spain, will not rise sharply.
An investment haven in times of uncertainty: the study recalls that, as has already happened in the past, once the most critical moments have passed, the recovery in this sector is always very intense, even higher than expected. Furthermore, the volatility that is plaguing the financial markets, added to the expectation that the era of ultra-low interest rates will lengthen, leads us to believe that the real estate sector will continue to be an interesting destination for investment.
Explosion of technological tools: this period of confinement will also be a boost for the sector to increase its technological commitment and for new digital tools. Many real estate professionals are taking advantage of this hiatus to train, update their tools, strengthen relationships with customers thanks to technology, … Both virtual visits to homes are growing, as well as the formation of down payment contracts or the payment of the formal payment. telematics.
Many vacation rental homes will change use: there will also be a shift from the vacation rental market to the traditional one due to the expected setback in the tourism sector, which would allow for an increase in the offer of long-term rental flats available on the market. This increase will be accompanied by a natural downward adjustment in prices.
Professional rental management will continue to grow: the Government-approved package of measures, which distinguishes between large and small landlords, will undoubtedly be of great help to vulnerable tenants. In addition, large holders have also provided their own contingency plans to tenants plus professional asset management enables a more efficient response than that of private landlords and that this trend will further consolidate after this crisis.
Only the best will survive: as in the other sectors of activity, the most prepared companies are the ones that will best recover from the economic blow, while the weakest are in danger of disappearing. The technology that real estate agents have, the training, financial tools and strength of their brand will make the difference.
Delay in rent measures criticized by the sector: the expansion of the epidemic has so far left one of the government’s star measures in the air: controlling rent prices. Despite the fact that the Ministry of Transport, Mobility and the Urban Agency had planned to present the rental price index in the first quarter, the measure has been postponed. The objective of bringing an initiative to the congress to control rental prices in those areas that have experienced exorbitant increases is also delayed.
Both measures have drawn criticism from both the opposition and the property market. In fact, national and international organizations, economic and sector experts have been warning for some time that establishing control and rental prices can be a counterproductive measure for the rental housing market itself.
