In recent months Covid-19 has destabilized every economic sector and not only, I would like to make an update on the real estate market in June.
A small premise must be made for both the European and American real estate market, before Covid-19 seemed the year of house price increases, interest rates are low so many households have taken out mortgages on advantageous terms.
In 2019 and first months of 2020, demand increased by 4% in Europe while by 4.5% in America (Corelogic data), it was thought that this race could continue this year but Covid-19 blocked everything.
Some analysts contacted by me a few days ago, told me that real estate market will fall by 20%, unfortunately sales have been suspended and several families have preferred to postpone purchase. Only sales were paralyzed?
House prices have also fallen, the percentage varies from area to area but rents have not been spared, which have fallen by -5% in 2020 and some predict -7% in 2021/2022.
Some analysts have made a prediction of house price’s returb increases in 2025, but will it really be so?
I would honestly be very careful in making such optimistic forecasts, we have to consider the high level of uncertainty and when the economy really recovers, only then will we be able to make prospects in housing market.
Let’s not forget that so many people have lost and will lose their jobs, families will have to downsize their projects and budgets, giving priority to primary needs rather than buying a house. This phenomenon justifies the drop in prices, but property owners risk being faced with so many unpaid rents, unfortunately this situation spares no one.
Covid-19 has not infected all areas, it is enough to look at the data of major cities such as New York, Los Angeles, London and Milan to understand that these great metropolises will suffer less from crisis.
Post-Covid-19’s future real estate market is uncertain, we will have to wait as local economies evolve, so many industries will unfortunately close with job losses, it will be up to governments to avoid social collapse.
Regardless of the decisions’s states, digitization and smart working will reduce jobs, my question is: how are all those families going to buy a house or just pay the rent?
