How will COVID-19 impact the European property market?
The COVID-19 pandemic has had a far-reaching impact on the economic situation worldwide. RE/MAX Europe’s most recent survey interviewed more than 2,000 top RE/MAX agents and brokers from 27 countries about the implications of the pandemic on European real estate valuations and transactions.
The results of the survey show that while COVID-19 has given rise to difficulties in the real estate industry, most agents across all regions questioned expect residential rental transactions to stay mainly the same as in 2019. Only, Malta, Greece, Slovakia, Slovenia and Montenegro predict a decrease, whilst Turkey anticipates an increase. The number of residential sales transactions are mostly expected to fall.
Germany, however, projects almost no change for urban areas but indicates a decrease in rural areas. France, Bulgaria and Poland project an increase for family houses (urban and rural). In general, apartments are more affected than family houses.
Price changes expected
Most countries expect a price decrease between 5-10% (or more) for apartments than for family houses. However, Germany anticipates a price increase of 10% for apartments in urban areas and no change for rural areas. France, Finland, the Netherlands, Turkey and the Czech Republic also expect a small price increase for houses, both in urban and rural areas.
signs of resilience in real estate
Despite COVID-19 causing a lack of confidence in the market, there are signs of resilience. There are fears of an economic recession, and unemployment figures are on the rise. However, CEO of RE/MAX Europe, Michael Polzler says: “The real estate market has proved it is crisis-resistant on numerous occasions and real estate will continue to be a good long-term investment, as we have historically seen.”
The European-wide survey also suggests that the residential property market seems to be more resilient than the commercial sector with an expected decline in valuation of up to 10%.
Although COVID-19 is expected to have a negative impact on some European real estate markets, the residential property market is considered to be relatively crisis-resistant in comparison to commercial property. Demand for housing continues to exceed the supply of real estate in Europe. Also, real estate is considered a safe investment, especially in times of crisis.
“It is too soon to predict what impact COVID-19 will have on the European real estate market as a whole, especially because the situation is different from country to country. However, even with property prices changing, real estate continues to be a secure investment with a good return”, states Michael Polzler, CEO RE/MAX Europe.