How does coronavirus affect and change the price of real estate?

The ongoing pandemic of coronavirus will certainly have an impact on the market prices (hereinafter referred to as the price) of the offered real estate. But that is probably the only truth. The coronavirus situation, by its nature, creates different specifics than the crisis in the period of the 2008 - 2012. Currently, there are factors both influencing the growth of real estate prices and also those that tend to push real estate prices down. Both factors will affect real estate prices by type, localle and at given time. 

Factors inluencing price growth:

  • almost zero interest rate - given thet the economist losses caused by the coronavirus pandemic wil be enormous, it can be expected that key interest rates will fall to zero,
  • a healthy mortgage market,
  • a general shortage of housing due to approval legislation, rising construction work price due to a lack of cheap foreign labor capacity,
  • government measures that are still in the approval process - abolition of the acquisition tax and extension of the sales profit exemption from 5 years to 10 years will incease demand for all real estate, the possibility of deducting interest on mortgage loans until the end of 2021,
  • reduction of foreign holidays with a long-term view of 2 years or more - increases the demand for real estate, which are focused on domestic family holidays with self-catering  - cottages, camps, land for recreation,
  • reitroduction of emergencies due to subsequent epidemiological measures - increases the demand for isolated housing in family houses, land for housing,
  • the nied to purchase goods in e-shops - increases the demand for commercial real estates with a focus on warehousing and related services, 
  • introduction of home office work - increases the demand for larger apartments and houses. 

Factors influencing the fall in prices:

  • the global pandemic of coronavirus will affect the overall unemployment in the Czech Republic. Currently, unemployment is artificially reduced by government measures Antivirus program valid until June 30, 2020. For those states that did not take such a measure immediately, unemployment increased from the original 3-5% to 25-29%. So can such record unemployment be expected in our country as well? Certainly, if government measures are not further extended and eventually reitroduced according to individual epidemiological waves. Such high unemployment would significantly contribute to the prices of real estate, with the possibility of a collapse or serious collapce of the real estate market due to a significant decline in demand,
  • in some large cities due the provision of short-term rent and stopping the influx of foreign tourists with the assumption of lasting again for at least 2 years, an increased number of offered apartments and a temporary decrease in apartment prices by oabout 10%. However, this specificity applies only to apartments in Prgue and Brno, especially taking into account the factors increasing the price, see above,
  • introduction of home office work - reduces the demand for commercial real estate - office space, 
  • government measures that are still in the approval process - the abolition of the deduction of interest on mortgage loans after 2021 and the uncertainty of those interested in buying real estate until this government measure is approved by parliament, 
  • the need to bay goods in e-shops - reduces the demand for commercial real estate - retail space - stone shops, 
  • reintroduction of emergencies due to subsequent epidemiological measures - reduces the demand for commercial rial estate hotels and accommodation, pubs and restaurants.

Due the above factors, whch are completely new in the real estate market, the importance of choosing the right real estate agency acquires a completely new dimension.

Our company FORTUNA REALITY s.r.o. and its professional real estate brokers will first correctly value your property, determine the market price and then professionaly carry out the sale of the property with the aim of selling it at this price. All the above fsactors will be used in the economic model of calculating the market price - see the sample valuation.