Impact of the Coronavirus (COVID-19) on Real Estate

The impact of the state of alert declared against the spreading of the Coronavirus (Covid-19) on the real-estate sector is uncertain. We would only be lying if we said we could predict what will happen in these first weeks of lockdown. But one thing is clear, how long it lasts will be a determining factor in how long it takes to get back to normal.

In this regard, it is obvious that some of the drivers of the housing prices will be affected. Given the latest news, we can already tell that the employment situation will be affected with an increase in unemployment and the coming furloughs. As a result, economic growth will stop and the supply and demand cross will head towards a drop in prices and sales.

The analysis we propose focuses on studying the trend in some macro-economic indicators, such as the unemployment rate and gross domestic product; demand indicators, the number of sales and mortgages granted; and supply indicators, analysing the number of licences given for new build properties.

The possible trends in these indicators will depend on different scenarios: a V trend, with a fast recovery; a U scenario with a slower recovery; and an L scenario that is more pessimist and leads to a structural shock. These scenarios will make the trend in housing prices follow different paths.

We invite you to take a look at our analysis, but please remember that these are all forecasts, so this information should be treated with the current circumstances in mind and knowing that they can vary depending on how the pandemic evolves, nationally and internationally.