COVID-19 is the name coined in February 2020 for the coronavirus disease that swept across the world. Starting as an endemic, the World Health Organisation later declared it as a pandemic due to its global reach and contagious characteristics.
It has affected everyone in one way or another as cities and countries have shut down to limit its spread. This closure might be temporary but its duration is unknown arousing uncertainty leaving many businesses unable to operate.
The first wave of harm from COVID-19 aside from the physical and mental effects of having the disease was reduced salaries and redundancies amongst the workforce as businesses were forced to shutter up or restructure, thus having a knock-on effect to their employees.
One of the first industries to be hit was the hospitality and retail sectors that should be in a position to recover once the lockdown starts easing but that is assuming that individuals have the disposable income to fuel these outlets.
The property market has a reputation for weathering storms such as economic dips and is often regarded as a robust investment asset. However, like many other sectors, it is unlikely to come out unscathed from a pandemic.
During the early outset of the outbreak, sales in the pipeline might get pushed through quickly should the buyer need somewhere to live or they could be delayed while a ‘wait and see’ attitude is adopted potentially with the hope of agreeing a lower price as the market starts to shift.
Property values are driven by a supply and demand mechanism. Just like any commodity, if demand outstrips supply then its value increases but the opposite way round and the market is flooded, then buyers have choice and properties devalue.
The price of oil during COVID-19 demonstrates this as for the first time in history producers are paying traders to take oil off their hands due to sudden lack of demand.
Whilst this is an extreme situation that would not be mimicked in the property market since property can be left empty whereas oil needs to be offloaded, some forecast that property prices will inevitably head on a downwards trend during a pandemic.
If people lack job security, buying or moving will inevitably get pushed on the back burner similar to during the last global recession in 2008.
This decrease in supply will lead to a market correction that does create a window of opportunity for those less financially affected due to the outbreak. Some people are profiting from the outbreak due to a change of living habits that are alerting spending habits or for example businesses that supply essentials during this time such as medical supplies and PPE.
Sellers who can delay marketing their property should wait until the market irons out but for those in need to dispose of their assets, investors will have less competition and are in a better position to negotiate a deal. Simultaneously governments are likely to implement measures to reduce the impact on the economy such as lowering interest rates allowing cheaper and more affordable home loans.
Buying a property during a pandemic is complex and it will depend entirely on the personal circumstances. Those in a safe and sound financial position could gain from cheaper property prices, more affordable lending, and even secure a property that might have originally been out of their reach.
However, purchases should be made for long term gains and not make a quick buck as gone are the days when a property could be quickly flipped for a tidy profit.
The advice? Assess your situation, calculate if you could afford a worst-case scenario should your financial situation suddenly change, shop around and remember that buying property is a long term investment and while we might have never experienced a global pandemic before, it will pass even though we cannot set a timeframe on when this will be.
Lastly, while property firms might have to change their operational format such as the introduction of virtual viewings, everyone always needs somewhere to live and this is why the property is regarded as a safe investment choice!
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