Does the corona pandemic have immediate or foreseeable long-term effects on the real estate market?
Corona and the real estate market
“Despite the corona pandemic, demand remains high”
According to a study, the demand for real estate in the surrounding area skyrocketed during the lockdown. In the meantime, the trend is barely noticeable, but the residential property market seems immune to Corona, and prices continue to rise.
Pinneberg instead of Hamburg, Erkrath instead of Düsseldorf, Dreieich instead of Frankfurt - during the Corona lockdown in spring, real estate in the surrounding area was suddenly in demand like never before. Search queries for condominiums and houses to buy in the bacon belts in June were up to 50 percent higher than in the previous year. This comes from data from the real estate portal Immoscout24.
The long commute to work in the city center suddenly no longer seemed so important thanks to home office, but more space and nature all the more. Thomas Schroeter, Managing Director of Immoscout24, thinks it is possible that this trend will continue after the pandemic. “The surrounding area could become more attractive,” says Schroeter. For the study, Immoscout24 analyzes anonymous search data from around 14.8 million users.
However, the data does not yet show a long-term trend. In September the search queries for corresponding houses and condominiums were only slightly above the level of the previous year. As quickly as they became more attractive, the hype was apparently over again when shops and restaurants reopened and employees drove back to their offices. If there is another lockdown in the next few months, the picture is likely to change again just as quickly.
It looks similar with the size of the property you are looking for. While schools were closed and the whole family worked and studied at home, Immoscout24 registered significantly more searches for houses with more than 150 square meters of living space and apartments with more than five rooms. There were up to 71 percent more corresponding contact requests in June. “Those who are looking and can afford it are therefore increasingly looking for a home that offers more space and opportunities to retreat,” says Immoscout24 managing director Schroeter. In the meantime, however, the search queries are only slightly above the level of the previous year, similar to the search for the surrounding area.
Crisis-proof real estate market
Overall, the study by Immoscout24 shows that the corona pandemic has not yet led to sustainable changes in the residential property market. While the consequences of office, commercial and hotel properties are already visible, residential properties have so far been very crisis-resistant.
Despite the crisis, prices in this segment are even rising. Houses to buy in the city in September were almost twelve percent more expensive than in the previous year, and it was almost 14 percent for condominiums. The prices for property in the country have also increased compared to the previous year, albeit more slowly than in the city. The prices of country houses and country apartments rose by a good seven percent each.
So there can be no talk of the consequences of the crisis. “Despite the corona pandemic, real estate prices continued to rise last year, and demand remains high,” says Schroeter. The expected escape from the city to the countryside is also not visible in the data. “The real estate market doesn’t change overnight,” says Immoscout24 managing director Schroeter.
Only when instruments such as short-time work and insolvency protection finally expire and more employees actually become unemployed, the effects of the crisis are likely to reach the residential property market.