Coronavirus May Have Huge Impact on Property Markets

British townMany people have been forced to stay indoors for a long time because of the lockdown. Coronavirus is going to have a big impact on different areas of life. This will be more than just a change in how people feel about their home. There is a chance of it having a big impact on the property markets across the world.

When people are faced with wage cuts, massive unemployment, job uncertainty, business failures and other challenges, it is hard for them to consider making a big investment like buying a home. This usually results in low house pricing, which was seen during the last recession and credit crunch that impacted the UK, US and many other countries around the world.

There was a 1.7% decline in house prices in May 2020 compared to the previous months, and this is according to the Nationwide house price index. This has become the largest decline for 11 years. There are some signs of things stabilising, and this is according to Nationwide’s Chief Economist Robert Gardener. The reason behind this is that the current situation is not the result of a normal economic downturn and people realise there should be return to normality relatively soon. So, house sales, purchases and lettings are carrying on, just to a lesser degree, and people continue to try their best to sell their houses quickly through fantastic listings, great photography and accurate floorplansUsketch.

A purposeful pause in spending and growth

Many governments across the world decided to put their economy on hold, and this includes the UK Government. There were measures put in place to support businesses and households by the UK Government. One good example of such measures includes the furloughing scheme.

The reason behind this is that the housing market is going to rebound when the lockdown restrictions are lifted.

House prices are still rising in the US. There are some areas in the country where a moratorium on evections has been put in place. The evections are usually done after 60 to 90 days, but there are some that are six months.

What this means is that the problem has been placed on the banks and landlords, and this means there may be some problems down the road. This is even more worrying when you consider the US unemployment rate in May is 13.3%, which is still high but lower than 14.7% in April.

Coronavirus has changed how we see our home and work spaces

There are other factors having an impact on the property sector. People are starting to realizing they can work from home, far from the city centres and towns, where they have gardens and space to use for their home office. While this change might not be permanent, it has already made people think about where and how they work and live.

Changes in the commercial property sector are more dramatic, and this has been especially felt on the High Streets of the UK.

Prof. Michael White, who is a real estate economics expert at Nottingham Trent University, says the retail market in the UK has been facing problems for many years and, with incomes being hit, people are not going to spend much after a recession.

For those dealing with office space, the COVID-19 pandemic turning out to be a one-off hit is what they wish, and this means only two-quarters of rents are going to be deferred. This means they don’t have to deal with a fall in property values.

Even at such changing times, the property market has two things going for it

The first thing is that even if the property prices fall, it is going to be a wise investment. This may not sound attractive, but it is important to remember that property is a long-term investment, and it is hard to find one that is going to be both safe and offer you a good return.

If the interest rate on a government bond is 0.5% a year, and the property investment is giving you a 3–5% return, you are going to have a great source of income whether you are a small investor or a big investment fund.


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