Coronavirus and related quarantine measures will not lead to a collapse in the cost of housing in Spain. However, it is possible that due to the economic consequences of the epidemic, prices for city apartments will fall to the lows of a year and a half ago. But suburban real estate, the current situation, it is likely to benefit, experts say the analytical center “Real Estate Market Indicator”.
The Initial Phase
During the quarantine period or, as the authorities call it, “self-isolation”, demand for the purchase and rental of housing in Spain fell significantly. It is difficult to organize real estate transactions in absentia, in addition, the economic consequences of the epidemic and the restrictive measures introduced in connection with it are already manifesting. Firstly, as a result of the suspension of activity of thousands of enterprises and organizations, many people lost their jobs or, at least, lost a significant part of their income and were forced to leave Spain. Secondly, due to a sharp depreciation of the dollar in March and the restructuring of supply chains amid an epidemic, prices for essential goods food and medicine began to rise, which also negatively affects the level of solvent demand for real estate. So after Corona propertyspain purchase will also have properness.
Momentary Halt, But…
The pandemic, of course, is not eternal, but the economic halt will not go unnoticed even for a month. Most likely, 2020 will be the year of the beginning of the next global economic crisis, and in Russia the situation is greatly complicated by the collapse of oil prices that preceded the quarantine and the devaluation of the dollar. According to forecasts of the Central Bank, the dynamics of Russia’s GDP in 2020 will be negative, this was stated by the head of the Bank. The other Bank expects a decrease in real disposable income of the population within 5% by the end of the year, and the rating agency ACRA does not exclude that the figure will fall by more than 5%. If the forecasts of economists come true, the decline in the welfare of people will be even more rapid than in the previous crisis.
The Ray of Hope
However, even with such a development of events, collapse in housing prices in Spain will not happen. Reducing the cost of a meter in one and a half to two times is possible only in the case of total impoverishment of citizens, as in the 90s, which is extremely unlikely. Authorities have accumulated enough money in the National Welfare Fund to carry out the budget and maintain the economy for a fairly long time, even in pandemic and cheap oil. Moreover, the recently concluded transaction + gives hope for the return of black gold prices to an acceptable level of $ 50 per barrel for Spain within a few months or a maximum of a year.
Resellers and new buildings
However, the real estate market, of course, will not be able to survive the sharp decline in oil prices, the dollar exchange rate and the coronavirus epidemic. It is likely that a square meter – both in the primary and secondary housing markets – will lose the gain gained in the last one and a half to two years due to the cheapening of mortgages and hype in anticipation of the reform of shared construction, and will return to the lows of 2018.