The effects of the global shutdown due to the coronavirus are also causing the real estate market in this country to take notice. Like all areas of social and economic life, it is being hit without warning and in the middle of a period of rapid growth.
One thing is clear: these are people who buy and resell apartments and houses. And they are the same people who, through no fault of their own, have come into economic distress through Corona. Be it through illness, short-time work or even unemployment.
Anyone who was planning to buy a property before Corona is sitting at home due to the pandemic. Property inspections and any appointments with the notary no longer take place. Suddenly, other things start happening. The consequences of this are also felt by the real estate market. If not right away, but later.
Forecast – tendency of decreasing demand and falling prices
Forecasts and assessments always have something to do with the sum of one’s own experience, and of course with one’s own interests. If observers and experts in the market assume that property prices could come under pressure, wish and reality are not far apart.
The current price development on the real estate market – with regard to the coronavirus – unsettles buyers and sellers alike. If apartments and houses were to become more than 5 percent more expensive in 2019, the housing market is likely to experience a noticeable dent in the coming months, real estate experts agree. Initial declines are already being observed in Google searches for “Buy, Rent and Live”. For real estate professionals an indicator for a possible end of the almost ten-year real estate boom in Germany. Even economists and real estate economists cannot imagine that the real estate market will be spared from the general economic slump.
The same applies to rent increases. This is an increasingly sensitive rental segment for landlords. In addition to the presumably stagnating incomes of tenants after the crisis, the regulations passed by the Federal Cabinet for the protection of tenants in the event of rent arrears are a huge burden on landlords. They cannot give notice to defaulting tenants due to Corona from April to the end of June. Initially, they too have no income.
In contrast, the large housing corporations have already made financial concessions to their tenants, in the form of payment deferrals, prompt waiver of rent increases or termination.
According to real estate experts, a slump on a broad front of purchase prices and rents is not to be feared. This is not least due to the housing shortage in the conurbations and cities, and the low interest rates for house and apartment financing. The housing shortage and the low interest rates set by the central banks are unlikely to change in the near future.
Also because everything is connected to everything else. The construction industry, the real estate sector, low interest rates, the lack of foreign workers due to border closures, and construction workers who have to work in staggered shifts.
The impact of the Corona crisis on the real estate market will be a long and creeping process. Like everywhere else in Corona times.
Born 1981 in Strasbourg, is a freelance journalist for various online media throughout Europe, focusing on finance, real estate and politics. He gathered his professional expertise as a consultant for global players and medium-sized companies. Fournier studied economics and german in Paris and Dresden. He currently lives in Saarland and has been a member of the Euro Leaders team since the beginning of 2019.