It is undeniable that these are unprecedented and uncertain times that we are living in. The Coronavirus has left its mark across the world, and the real estate market is not unscathed. However, for those who are fortunate enough to still have the means to invest or buy a home—now is the time to act.
The economic market in Germany had already begun to slow by the end of 2019, mostly due to the outbreak of the virus in China. Now, with the closure of many institutions and businesses, we are already seeing a negative effect on the economy. We can also expect to see an effect on the property market—albeit indirectly and with a time lapse. That being said, markets for residential and commercial properties will be affected differently. Residential properties are much more resilient in crises such as this one, mostly because they are not so dependent on macroeconomic uncertainties.
Unlike the stock market, the property market is much less turbulent. In the short term, the virus has little effect on the demand for housing. While commercial properties will face the biggest risks, it is unlikely to have a lasting, long-term negative effect. Newly built apartments could also suffer short-term consequences if building sites are closed due to emergency measures, slowing down construction for up to three months. However, economists are hopeful that things will rebound in the second half of 2020.
In Berlin specifically, the prices of real estate have levelled off over the past few months. However, the Mietendeckel (the Berlin rent act) seems to have had more of an immediate effect on the market than the Coronavirus. Housing in Berlin is still very much in demand, and that is unlikely to change in the near future.
A recession might impact the value of a property, but real estate is considered a long-term investment that shouldn’t be postponed due to short-term situations. If your current income is stable, and your economic situation is unlikely to change very much in the coming months, then there is no viable reason to hold off on buying a home. An even greater incentive to buy now is the fact that interest rates are extraordinarily low, giving you a better opportunity to find the home of your dreams. If you are financially able to ride the waves of the market, the overall payoff is greater than the risks.
Recessions are inevitable. However, as the financial markets sway with uncertainty, the bricks-and-mortar nature of real estate means that it is unlikely to lose too much value. If you find yourself in a fortunate position and have a stable and reliable income, it could also be a profitable time to buy. Interest rates are at an all-time low, and real estate is considered a long-term investment. The payoff will far outweigh the risks if you are able to buy a home at this time.