Apartment shopping during lockdown
The tragic effects of the Coronavirus pandemic are causing a huge deal of uncertainty throughout society. In this changing environment, many people still need to move home, and may be unsure how their search for a new apartment could be affected by this. We hope to ease your concerns and provide you with some help and guidance.
Effects on the market
The most obvious effect is that, in any time of uncertainty, people seek security. There will be fewer people buying properties and fewer people selling. Uncertainty depresses markets, so the first and most noticeable result will be both a lower demand and supply of properties. As this reduction acts upon both sides, prices are perhaps less affected than might be expected. The signs so far in Berlin show that prices have levelled off from their previous increase. This is what you might reasonably expect from a market which is holding its breath and waiting to see what will happen in the future. Yet real estate is a traditionally resilient asset. The current uncertainty is not based around real estate, as it was in the 2008 financial crisis. This should lessen the specific impact of the uncertainty around Coronavirus on the real estate market.
The other side of buying an apartment is obviously the financing. Interest rates were already low, and some rates have been lowered further still, to historically low levels. On the one hand, this can be seen as a positive for anyone looking to finance their property purchase. On the other hand, however, lenders are being far more rigorous about who they choose to lend to. Financial institutions fear uncertainty more than almost anything, and so lenders will need to be even more convinced that, as a prospective loan recipient, you are not likely to default on payments.
If you are buying a new home for yourself to live, planning to stay there for several years, and you have a stable and secure income, then there is no real reason why you should avoid buying an apartment now. It makes good financial sense in comparison to renting and should remain a solid investment for years. Buyers are also often sellers, and so much of the same advice would apply to them. There will still be people out there looking to buy a new apartment, and though prices may not be increasing at their previous rate, they remain stable. However, if you have the luxury of being able to wait, if you have not already put your property on the market or reserved your own next property, then you may feel more comfortable waiting for some time until there is more certainty around the market and the Coronavirus situation in general.
Effects on the process
So, if you’re going ahead with buying an apartment, how is the process likely to be affected? Well, the guidelines on social distancing and isolation are likely to make the practicalities more drawn-out and difficult. Open-house viewings will not be taking place, and there may be strict sanitary guidelines about any private viewings. All non-essential communication will be done by distance, rather than face-to-face, so you will need to be precise and clear in any emails and phone calls. Additionally, it may be more difficult to get appointments for notarisation and other legal necessities. Due to this, many institutions are offering extended reservation periods, to give prospective buyers more time to organise financing, documentation etc. To learn how EverEstate is making the real estate search more accessible during lockdown, read about our all-round digital service.
The future is digital
At EverEstate, we already try to bring the entire purchase process online, and we will continue to conduct as much of our business at a distance as possible. Instead of face-to-face meetings, we can arrange video-conference calls with anyone looking for advice or guidance about looking for an apartment. We can assess your needs and send you the most relevant properties for you to look over. All the apartments on our website feature 3D tours and extensive image galleries, so you can view the apartment from the comfort of your own living room. In the future, we hope to be able to incorporate Virtual Reality tours of some of our apartments, so you can truly visit it without even stepping foot inside the front door.
These are uncertain times, and uncertainty breeds doubt and a desire for security. But although the short-term outlook may not look that promising, in the medium- to long-term, things should hopefully not change that much. Remember, real estate is something whose life should be measured in years, and thus your considerations should be equally long-term. If you’re not in so much of a hurry to move, perhaps you can take this time to look around and make some decisions about what kind of apartment you are looking for. It’s important to remember that the rebound will happen, and things will calm down.