Statistics in Europe show that property prices during the pandemic kept steady growth with only 2 (Spain and Hungary) out of 27 EU countries showing a slight decrease in price. Overall house prices in Europe grew 5.7% in the year 2020. (Source: Eurostat April 2021)
Here are the main reasons why prices kept their stability and even have shown growth during the pandemic.
1 Low interest rates
Interest rates have been at a record low level ever since the 2008 economic crisis, and central banks keep on low rates giving the possibility to keep mortgage interests at also unprecedented low levels.
Who wouldn’t like to take a chance to buy while interests are low? People will do their best to buy in any way they can. Logic also says that banks will keep on interests low in the foreseeable future due to pressure from governments in helping economic recovery process.
2 Government tax schemes
Many governments including ours have came up with incentive schemes to help people buy their homes.
Since those schemes always have an expiry date (in our case signing of Promise of Sale till July 2021 and doing Final Deed by January 2022), people are motivated to bring a decision on buying their home faster, making the pool of real serious buyers even bigger than usual. An increase in interest in buying kept prices steady during pandemics time.
3 Fewer houses for sale
Pandemic has taken its toll in real estate sales too, especially in the second and third quarters of 2020 when it was nearly impossible to view properties.
Potential sellers did not want to risk infection with buyers wandering through their homes for showings, automatically decreasing the number of properties for sale on the market.
Buyers did not want to meet agents out of fear of possible infection and the whole situation brought a slowdown in number of available listings, making properties available for viewing scarce and keeping their prices up despite pandemics.
4 Shift in family spending
Although in Malta there was always strong spending on housing due to the tradition of owning a home, European and world economists have noted that, during the pandemic, households are shifting their spending patterns: less for travel and vacations, concerts and shows, eating out, entertaining, and commuting, and more for housing, especially if some extra space is needed to work from home.
Houses with a little garden or terrace, apartments with balconies, penthouses, and maisonettes… generally all units with some outdoor space became sought after during pandemic.
Additionally, the pandemic has pushed more millennials into homeownership, ending their delays in decision making and buying, and putting an additional push on home prices.
5 Pandemic-induced buying of real estate
Wealthier households have a sweet problem – in what to invest extra money.
Pandemic is causing economic crisis and while in normal circumstances they would maybe opt to buy stocks or bonds of different companies, in pandemic time there are just a few safe investments on the plate, and real estate is one of them.
Demand created by wealthier people in buying another property has created steady growth in property prices despite economic gloom predictions for the upcoming couple of years.
What to expect in near future?
In order to boost spending and start the economic wheel turning again, governments will be forced to print money, meaning our money in a year’s time will not have the same value as it has today. Prices will inevitably raise and housing will be even less affordable than it is today.
Is it the right time to buy a property?
It is always the right time to buy property…especially now.