THE COVID-19 EFFECT
THE POST PANDEMIC
in home prices
in the next
Just Some of the variables
in our predictions
Correlation between GDP and Housing Prices is very strong (>0.8 in most countries) and given that there is a time lag between changes in GDP and changes in house prices then the recent sharp falls in real GDP in the major economies globally sends strong signals that falls in home prices will follow once the property market returns to operation.
One of the most immediate financial implications of Covid-19 for most people was the change in their employment status. Many people are in an uncertain situation as many employers are unsure when or indeed if workplaces will reopen. Remote working has been possible for some but for the majority remote work is not an option. Clearly any uncertainty around employment status will negatively effect a person's ability to secure a mortgage. This increase in uncertainty will result in fewer mortgage applications being approved and so fewer offers will be made on houses which will mean lower sale prices.
With the increased likelihood of social distancing measures being retained in the the short to medium term these measures are almost surely going to have a negative effect on house prices. Virtual viewings are highly unlikely to replace actually being present in a home so that you can open cupboards, feel the temperature and detect any odours that may require further investigation; all these things that are impossible during a virtual viewing. Fewer physical viewings will inevitably mean fewer offers which in turn will result in lower sale prices.
A potential implication of Social Distancing could be the increase in demand for houses outside of urban centres. With the upsurge in remote working then this move away from urban centres could be an increasingly viable alternative for many. Such a shift would lower demand and prices in urban areas with the opposite effect in rural areas.
WE ARE ADDING MORE VARIABLES EVERY DAY