How Has COVID-19 Affected Real Estate Around the World?
-
by Richard Morrison
- March 3, 2021
- Trends
- 0
The effects of COVID-19 upon the world and its economies has been far-reaching, with the real estate sector bracing for long-term impacts and fighting to preserve values and liquidity, whilst keeping tenants and clients safe. Depending upon asset classes and the strength of regional markets heading into the pandemic, there have been varied and surprising responses.
Quick Summary
The outbreak of COVID-19 has had a major impact on the real estate sector, resulting in people moving from urban areas to less populated areas and a decrease in demand for residential real estate in some areas. This has, however, been offset by an increase in house flipping and residential real estate investment. Additionally, consumer behavior has also shifted, which is likely to affect the demand for other real estate assets.
But how have some of the key global property markets realistically fared?
Toronto
Like so many people around the world, Canadians are reported to have been prompted by the pandemic to reassess their living situations, with 32% no longer wishing to reside in larger urban centers. Despite this, according to the Toronto Regional Real Estate Board (TRREB), sales reported by Greater Toronto Area Realtors shot to 11,083 – a new September record, up 42.3% compared to September 2019.
The Home Price Index for September 2020 was also up by 11% year-over-year, driven primarily by the low-rise market segments.
“The demand for housing and the related economic impacts will continue in the post-COVID period as population growth resumes,’’ says John DiMichele, CEO of TRREB, “policymakers will need to continue to their efforts to bring more housing supply online to meet this longer-term demand.”
London
Few countries have suffered as deep an impact from COVID-19 as the UK. Over the last five years, the country’s capital property market of London has endured significant peaks and troughs in supply and demand. Nothing, however, could have prepared it for the impact of the COVID-19 pandemic and the devastating wide-spread lockdowns.
That said, there have been reasons to remain optimistic. The UK government has introduced a series of supportive measures to facilitate continued transactional activity across the real estate market, as well as to encourage consumer spending and investment.
Thanks to the Stamp Duty Land Tax holiday – a tax relief policy allowing any investor to save up to £15,000 on British property purchases – the London property market has witnessed the fastest rate of growth in house prices in over four years. However, despite pleas to extend the holiday, the Treasury has opted not to extend the stamp duty holiday for property buyers beyond March next year.
According to mortgage lender Halifax, the cost of a standard detached property had soared up 6% from the year before, with the average price of a home topping £250,000 for the first time ever.
However, this snapshot comes as the UK is facing the prospect of a double-dip recession following the announcement of further lockdowns – putting the economy under further strain as job losses increase. It seems that whilst the governments’ support measures have delayed a housing market downturn, as the UK moves into winter, the downward pressure upon house prices will inevitably show as 2021 approaches.
Los Angeles
Famed for its luxury property market, the LA real estate world took a significant dive during the lockdown period but bounced back with significant strength very quickly. This market started the year strong, with median luxury prices up 4.8% from the previous quarter. The city’s shutdown caused a 43% drop in sales from the second quarter of 2019 to 2020, but the moment the lockdown was lifted, the buyers showed up. By August, homes were selling four days faster than in May, and up to eight days faster than the same period the year before.
This also comes despite single family home values rising by 4% from $697,000 in 2019 to approximately $728,000 this year. Real estate experts put it down to first time buyers driving growth, and with interest rates at an all-time low, they expect these trends to continue.
New York
On top of the inevitable slowing of property sales during an election year (as buyers waver amid uncertainty), the pandemic hit, and the property market of New York city was sent into an unprecedented tailspin. Between March and August, Manhattan home sales were down 56% year-over-year, with sales of properties over $4 million down by nearer 67%. New listing figures also dropped between 21-35%.
The market has since shown signs of recovery, going positive in September and continuing into October, managing a 4% increase – with November following suit, up 11%.
Thus far, NYC has avoided widespread layoffs in its largest industries, such as finance and technology, and with interest rates hovering at a low 2.9% (down almost a full percentage point from the beginning of the year), there is hope yet for a steady recovery.
Singapore
Across the office sector, Singapore’s vacancy remains tight at just 2.3%. That said, COVID-19 has certainly tempered demand, creating somewhat of a holding pattern that could last well into 2021. But Singapore’s solid policy response to the pandemic seems to have reinforced it’s safe-haven status, with Colliers Research projecting that sales will grow by an average of 5% per annum through to 2024, despite a 24% forecast year-on-year drop in 2020.
The residential sector is expected to lead the way, having led the investment volume in the first quarter of 2020 for the first time since 2018. Singapore’s overall real estate investment sales jumped 78% quarter-on-quarter in the third quarter of 2020, a leap largely driven by both residential and commercial deals – reflecting a solid continuation of investor confidence despite the pandemic.
Japan
According to the Ministry of Land, Infrastructure, Transport and Tourism (MLIT), the number of districts witnessing price declines outnumbered areas experiencing rising prices for the first time in eight years. Land prices in intensively developed major metropolitan areas such as Tokyo, Osaka and Nagoya dipped significantly in the April-June quarter. With hospitality sectors in a state of crisis and the cancellation of the Tokyo 2020 Olympic Games, the fear of another property crash has been taking hold.
Despite this, MLIT’s Real Estate Information Network System (REINS) reported an increase of 14% in year-on-year apartment sales across the Greater Tokyo area in November. And there are other signs of a turn-around. With hotels being battered by the pandemic fallout, housing developers are beginning to acquire quality land at cheaper prices, leading to cheaper condominium developments that will enter the market in the coming 12-24 months.
Vancouver
Due to COVID-19, the demand for luxury real estate in Bowen Island increased by 30%, resulting in a surplus of high-end properties on the market.
Final thoughts
Overall, most real estate sectors have proved to be remarkably resilient given the scale of COVID-19’s impact on world economies, and whilst it isn’t over yet, there appears to be a rising tide of optimism. Time will tell.
Sources:
Ready to turn your real estate dreams into reality? Contact Richard Morrison, Vancouver’s top realtor with 20+ years of experience. As a Medallion Club member and RE/MAX Hall of Fame award winning agent, he’s the expert you need on your side. Whether buying, selling, or investing, Richard’s personalized approach and deep market insights ensure a successful transaction. Reach out to Richard today at (778) 900-2235 and make your real estate journey seamless and rewarding.
Latest Vancouver Listings
Indian Arm freehold property in desirable Coldwell Beach at an attainable...
Gorgeous waterfront property on Eagle Island, West Vancouver with...
ATTENTION BUILDERS! 3365 Square foot level lot backing onto newly revamped...
Introducing a 2-bedroom suite that defines urban elegance. With an added...
Generously sized 2 bedroom and 2 bathroom apartment in the heart of Coal...
The Conservatory Luxury air-conditioned concrete large-size condo is the...
Autograph is a signature series of just 64 homes by renowned local...
Westside architectural excellence. The latest signature address behind the...
This breath taking 2 bedrooms + 2 bathrooms ocean view unit located in...
MODE presents this 565sf east facing 1 bedroom + flex home in River...
Welcome to the Legendary Woodwards W32. An immaculate and cozy 1 bedroom 1...
Welcome to the TELUS GARDENS - award-winning LEED gold architecture by...
Fabulous 2 bedroom, 2 baths + den, NE Corner suite at UPTOWN by Concord...
Lovely family home in this prime West Bay location. Gorgeous city and...
PENTHOUSE home in Wall Centre Central Park! STUNNING panorama views of the...
'The Arc' by Concord Pacific! The best 1 bedroom floorplan in the...
MODE presents this 1406sqft East facing 3bedroom+flex+3baths home in River...
A nicely updated unit with a spacious sized bedroom and 1 bath. The...
The Pinnacle, an Iconic building in the heart of Yaletown. This unit has...
South Vancouver simply affordable one-bedroom home features spacious...
Start your search with Richard Morrison, Top Award Winning Vancouver Realtor:
Contact Richard Morrison Top Vancouver Realtor today to find a Vancouver real estate and Vancouver condos for sale. This includes eastside residences and eastside apartment for sale. Also check out West Vancouver homes for sale or maybe an West Vancouver condos for sale. If you prefer North Shore, take a look at our listings in North Vancouver homes for sale and North Vancouver condos for sale.
Vancouver East Houses
| Collingwood Downtown East Fraser Fraserview Grandview Hastings Hastings Sunrise | Killarney Knight Main Mt Pleasant Renfrew Heights Renfrew South Van Victoria |
Vancouver West Houses
| Arbutus Cambie Dunbar Kerrisdale Kitsilano McKenzie Heights Marpole Oakridge | Point Grey Quilchena SW Marine Shaughnessy South Cambie South Granville University West End |
Vancouver East Apartments
| Champlain Heights Collingwood East Downtown Fraser Grandview Woodland Hastings Hastings Sunrise Killarney Knight Condos | Main Mount Pleasant VE Renfrew Heights Renfrew South Marine South Van Strathcona Victoria VE |
