HAS CORONAVIRUS CONTAMINATED THE REAL ESTATE MARKET?
Our nation, like many others, is currently experiencing a health crisis without precedent. The coronavirus outbreak, if not the first on a wide scale to affect a human population, is testing a much more dynamic and interdependent globalized economic and social structure than in the past. Legitimate questions about post-crisis requirements for operation resumption are being expressed. Reflections on the repercussions on real estate are already expected for the rest of the year.
The property market is on pause
The coronavirus outbreak is pushing us to change our way of life. Everybody has seen this on their cost in the real estate sector. The effects are important, and it requires immobility. The required confinement imposed by the public authorities means that when visiting real estate, meeting in agencies or at notaries, there are binding laws. If resources such as virtual visits or electronic signature allow for more relaxed execution of such tasks, it may sometimes be difficult to finalize the purchase or selling of a property during the crisis period. In this region, the dematerialization of services can not completely replace human interaction.
In addition, the diminishing economic background and the direct effect on many jobs (or wages) allow each player to be vigilant and wait to see more clearly. However, over the course of the year, it is likely that the health crisis effects will be cushioned.
Fast recovery is likely
The real estate market is fortunate: sales are not generally lost over a period of time. Since buyers are still going to have to purchase it, much as sellers have to sell theirs. Therefore, the absence of activity for those few weeks or months would lead to an explosion of supply and a (more gradual) resumption of demand at the end of the time of confinement.
Another benefit for buyers: an increased number of properties for sale would allow them to choose between more properties, and to show a more demanding side of themselves. This will also help sellers who may have more difficulty finding a buyer.
Moving out of this crisis may be financially attractive
Continuing with the rise in the amount of items available for sale, this may cause prices to fall as sellers want to lower their claims to part with their products sooner. Particularly if demand only rises slowly: the duration of crisis and confinement that would have crippled the country, with financial losses for many economic players, may delay some projects over time or subject them to longer research or more economically advantageous products.
The news will be good on the banks’ side: the absence of loans for a couple of weeks should allow them to grant more after the crisis, and at reasonable rates.
If general buyers want to benefit financially, the coronavirus outbreak will not be free, at least mentally, for anybody. Particularly for real estate staff, agencies and freelancers, who will have to resume their operation in a few weeks’ time, we hope.