One of the most visible effects of the Covid-19 pandemic can be seen in how the real estate market has drastically changed since 2020. Many have called it “The Great Covid-19 Migration” and at onset, this pandemic has re-ordered the global real estate markets across the board on an unprecedented scale.

Real Estate Market

Its overall impact is evident in the rise of empty office buildings, vacant shopping malls and abandoned flats in metropolitan areas and the once densely populated business centers, especially before the roll out of the vaccines.

An article published in January 2021 by the Stanford Institute for Economic Policy Research (SIEPR) stated that property markets in almost every part of the world affected by the pandemic has experienced “the donut effect” which is basically a term coined to explain the shift in the demand for goods and services from the city centers to the suburbs and less dense surrounding areas impacting jobs, prices and everything else.

Experts has cited four key factors that caused this trend:

  • The lack of access to city amenities due to the lockdowns
  • The aversion to densely populated areas due to fear of Covid-19
  • The economic shock brought by the pandemic
  • The Rise of Work From Home (WFH) job opportunities and the hybrid set up options for both work and school

Reason number four may be irreversible, but the first three could just be temporary, and we’re already seeing some cities rebounding from the effects of the heavy restrictions imposed in the last two years.

As with other commodities, real estate prices are also heavily influenced by demand, and as the demand for suburban living increases so are the prices of homes. Meanwhile, the lack of interest for flats, office spaces and commercial properties in city centers and many business districts has brought rental prices down especially during the first months of the pandemic.

Also in 2020, countries around the world have implemented changes to real estate policies in order to lessen the burden on tenants and in some cases landlords.

  • In the U.S., at least 34 states have temporarily prohibited evictions. Major mortgage lenders has suspended mortgage payments. Some U.S. states have halted construction projects unless essential, such as medical facilities.
  • In U.K., they have provided temporary mortgage relief and rent holidays. Banks in Europe was encouraged not to foreclose on late payments, while European governments have granted retailers tax relief.
  • In Asia, many landlords have offered temporary rental rebates and rent discounts.

The good news is that there’s generally confidence that overall consumer demand and buyer preferences will sooner or later snap back to normal. And it is, already going back to a new normal.

But regardless of this probability, the repercussions of the great Covid migration has the potential to re-shuffle the essential demographic and economic balance of many countries for the next generation. This is what realtors, investors, and politicans should be paying attention to.

Real Estate Market

The real estate market should also be able to address key questions like:

  • Will people feel safer living in location where they can spend all year social distancing outside?
  • Will companies let workers work remotely for the rest of their lives
  • Why go back to retail shopping when I’m already ordering everything online?
  • What’s the point of living in city centers when half of the restaurants, bars, and museums never resumed operations?

The answer to these questions will probably dictate the state of the property market in the next 3 to 5 years. Rather than relying on traditional economics or customer-survey-driven approaches, real estate leaders are now currently looking to psychologists, sociologists, futurists, and technologists for answers.

The process of identifying the optimal targets has become extra challenging as Covid-19 has led to many changes and increased economic and market uncertainties.

The effects of the pandemic vary heavily across countries and regions, making insights into local market dynamics increasingly important.

Areas such as recalculations of future rental cash flows and updated tenant risk profiles also top the to-do list of both construction companies and investors. Across all areas, the situation is further complicated by the lack of comparable historical data.

On the positive side, the decline in city property prices is curtailing the affordability crisis as middle and lower-income employees are now able to afford living in city centers. And with the rise in remote working set up, commuting costs will go down.

However, buying or renting a real estate property today suffers the same challenges as the developers or landlords, as the volatile nature of the market goes both ways. But aside from the usual location, accessibility, proximity to work and safety concerns, the price is now a top deciding factor more than ever as many properties are being priced more competitively and with more attractive, easy-on-the-budget packages.

To help you with your decision, you’ll probably need a trusted, secure and detailed mortgage calculator to calculate your monthly fixed rate amortising mortgage payments or even the interest on your mortgage payments.

For this purpose, I am recommending MortgageCalculator.UK

mortgage calculator

Aside from calculating detailed mortgage payments and interests, the site also allows you to access these other features:

  • Mortgage Affordability Calculator – Estimate what you are likely to qualify for based on your income.
  • Mortgage Amortisation Calculator – This calculator allows users to create a printable amortisation schedule for their loans. In addition, it allows users to enter their predictions for how mortgage rates may change in the future and see how rate shifts may impact their monthly repayments.
  • Mortgage Overpayment Calculator – See how much you will need to pay monthly to pay off your loan in a specific number of months and years.
  • Remortgage calculator – It allows for equity withdrawal and calculates total loan expense outside of equity withdrawal

After dropping sharply in the early phases of the pandemic, real estate prices are on the rise to near normal. However, the initial price decline, as well as the pace of recovery, vary widely across regions and different segments of the real estate market.

With demand consolidation towards credible players gaining momentum, many real estate players are now on the aggressive, driving sales and breaking pre-pandemic records. A good indicator for another boom.

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