The impact of the coronavirus on the European real estate markets will be that of falling house prices. However, according to S&P (Standard & Poor's) Global Ratings, by 2022 everything should return to pre-pandemic levels thanks to economic policies.
According to a recent report titled "Government job support will stem European housing market price falls", dealing mainly with the consequences of the COVID-19 crisis, Europe will face the deepest long-term recession this year. But in the same way, the recovery expected by 2021, although more gradual, will be faster than what normally follows a recession in an economic cycle. It is also much stronger than the last recovery, after the financial crisis of 2008.
House prices in Europe
What does this mean for the European real estate market? According to S&P, the drop in transactions during the blockade will only show its effects in a few months. In the meantime, buying and selling activities will also be weak due to the fall in employment and therefore in disposable income, because of the pandemic, which will cause many purchase decisions to be postponed.
However, analysts do not expect a collapse in property prices in Europe: this case will be avoided by the revenue support measures implemented by governments, which will ensure that the number of redundancies are limited.
Real estate prices fall in 2020, the countries most affected
However, all this will not happen uniformly in all countries: Italy will be one of the countries most affected, for example. On the other hand, countries whose property supply was already low will be less affected, will support prices structurally and will maintain attractive returns for those wishing to invest, particularly for the Swiss, German, Irish and UK markets. Other factors that will support prices will be the decline in construction activity and the higher costs that will be incurred due to social distancing and the higher cost of materials.
As for loans for the purchase of housing, even if some more restrictions may arise from credit institutions, this is happening in a very moderate way thanks to the support of the ECB and a monetary policy that will still maintain favourable interest rates for those who wish to take out a mortgage.
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