Property prices in the corona crisis - recession in the property market?

Property prices in the corona crisis - recession in the property market?

The pandemic caused by COVID-19 has a massive impact on financial markets and the economy worldwide. Many investors, property owners, potential home buyers and landlords are therefore asking themselves: Is the corona crisis also affecting the real estate market? Are property prices rising or falling due to the coronavirus? We will get to the bottom of these and similar questions in the following. Due to the current market dynamics we will regularly update the contents of this page dedicated to COVID-19 and real estate

1. Are property prices falling as a result of the corona crisis?
2. Is it safe to buy offplan in Spain during Covid times?
3. Property price development for residential estate due to the corona crisis
4. Should I wait for the purchase/sale of my property?
5. How property sales and rentals work in the corona crisis?  

1. Are property prices falling as a result of the corona crisis?

According to current information, no unusual developments have been noted yet. Kai Enders, member of the board of the Engel & Völkers AG, makes a differentiated market evaluation and estimates the situation as follows: The Corona pandemic leads at short notice to shifts of purchase conclusions, on a long-term basis it will, however not reduce the housing demand.

The reason why the coronavirus crisis does not seem to have had much impact on property prices at the moment is relatively simple: real estate does not lose its attractiveness for investors in these times. A home can still be considered a stable investment in times of crises.

These days, Marbella remains one of the mayor second home destinations in Europe and thusly, there is a consistent demand, particularly on newly built properties. Then again, there is always people in need of sale therefore interesting offers may emerge for investors on the resale market.

Additionally, facing a dubious summer where no hotels, bars, beaches or restaurants might be open, we have noticed an increase on the internal demand for short term rental properties, particularly for properties with a private pool.

2. Is it safe to buy offplan in Spain during Covid times?

After the crisis in Spain, between 2008 and 2013, and to protect buyers, the 20/2015 law was approved. The law determines the obligation of a bank guarantee or insurance from the moment that the building license is obtained. In this way, if the developer declares bankruptcy, the buyer can claim the money from the bank or the insurer. In the event that the developer does not have the guarantee, the jurisprudence of the Supreme Court has indicated that the bank is responsible for reimbursing the advance money plus interest to the buyers.

Moreover during the state of alarm in Spain, the construction has been considered as an essential segment stopping therefore the activity for only two weeks rather than 5 as all others sectors, until now. Affecting not only new developments but also refurbishing’s, allowed as long as there are no habitants in the property

3. Property price development for residential real estate due to the corona crisis

It is not yet foreseeable that property prices will fall as a result of the Corona crisis, given the current market situation. However, it is only possible to estimate how prices and the number of sales transactions resulting from COVID-19 will develop in the second or third quarter of this year. At present, however, it appears that the property market will remain stable in terms of prices despite the corona crisis. Especially in times of crisis, real estate is once again proving to be a safe investment.

4. Should I wait with the purchase/sale of my property?

Understandably, some owners and potential buyers are currently uncertain whether a property investment makes sense. From our point of view, however, we can overcome these concerns: In view of the largely unchanged market situation at present, there is no economic reason for investors and owners not to buy or sell a property. No change can be observed at present in the low interest rate level either. For investors and potential buyers, the attractiveness of real estate is therefore unbroken. In addition, thanks to the modern tools from Engel & Völkers, nothing stands in the way of marketing in times of the corona crisis. 

Engel & Völkers board member Kai Enders as follows: "We are currently registering a number of postponements, but only a few cancellations. We assume that once the current situation has been overcome, business will continue at the current level and even catch-up effects will be seen". 

Thanks to the modern tools from Engel & Völkers, nothing stands in the way of marketing even in times of the corona crisis. In the following section, you will learn how a property sale or rent currently works:

5. How property sales and rentals work in the corona crisis?

COVID-19 and real estate: Virtual viewings with Matterport 

Physical viewings of properties have become almost impossible due to the corona crisis. Understandably, neither seller nor buyer want to face the risk of infection. But thanks to our cooperation partner Matterport, this is no longer an obstacle to selling a house. With the help of a modern  360° camera , a virtual 3D image of the property is created, which then allows you to view the property as if you were there - all from the comfort of your own home. For this purpose, a single shoot of the property needs to be completed by one of our real estate agents before you approve it for online upload. Discover for yourself what such a virtual property tour can look like:

Perfect overview thanks to impressive drone recordings

In addition to the virtual tours, we also offer you the opportunity to present aerial views of the property when marketing with Engel & Völkers. After all, it is not only the features of the property that are decisive for buyers, but also its location. Thanks to our cooperation partners, it is possible for us to market your property using impressive drone recordings. With the help of such photographs, you can also provide potential buyers with a perfect overview of the location and draw attention to nearby hotspots such as schools, shopping centres and infrastructures.