Impact of the coronavirus on the Irish property market
The new coronavirus is having a major impact on society and the economy. But what does that mean for the property market in Ireland and elsewhere?
Read on to discover how the industry will fare and whether house prices are likely to fall in the coming months.
Only a few months ago we were sailing into 2020, betting on a ‘Brexit bounce’ to boost the economy and a modest 2.4% rise in house prices.
No-one could have anticipated then that a little-known virus first reported to the World Health Organisation (WHO) on 31st December 2019, would come to create so much chaos in public health, the economy, and quite possibly the global property market.
That said, the impact on the housing market is as yet unknown. Typically, a home purchase takes between 4-6 months. So any data on market disruptions courtesy of COVID-19, won’t be seen until at least another three months.
Cancelled Sales and Reneging Buyers
However, estate agents in Ireland and elsewhere are already reporting cancelled sales, reneging buyers, and missed viewing appointments as just some of the current upset to business caused directly by the coronavirus.
On the flipside, some clients eager to see through the sale or purchase of their properties are finding it difficult as lender approval and loan offer letters are delayed or put off being signed till a later date.
Property Market Update Around the World
Around the world, the fact that more and more folk are self-isolating means less properties are coming on the market in general as people have to stay put in the homes they’re in for the moment.
- In North America, according to a recent survey carried out by the US-based National Association of Realtors (NAR) querying the coronavirus impact on the market, 48% of agents claimed there was an acute reduction in the number of recent buyer interest and at least a 7% rollback of seller traffic.
- In the UK, and London specifically, the property market which was the strongest it had been since before the Brexit referendum, is now expected to slow down significantly.
- In Spain, which next to Italy has the fastest growing number of coronavirus cases in Europe, local analysts expect the housing market to flounder in 2020. The second-home market, which relies heavily on tourism, is likely to be particularly hard hit as a nationwide lockdown alongside ongoing travel bans has already caused severe disruption to this industry.
- And equally distressing, in Australia economists are claiming that house prices could fall as much as 20% if a coronavirus-led recession lasts longer than six months.
Global Property Crash Not Currently on the Cards
But is it all doom and gloom, and should we be battening down the hatches in preparation for a property market meltdown?
According to some analysts, though real estate markets in several countries will feel the full force of the coronavirus impact, it’s unlikely there’ll be a global property crash.
And in the UK and Ireland, many experts believe that – as with Brexit – a market slowdown will pick-up again once the period of concern and uncertainty has passed.
Creative Solutions in the ‘New Normal’
Equally, the ‘new normal’ is forcing some creative, practical protocols to be put in place.
For example, the country’s two largest estate agencies, Sherry FitzGerald and DNG, have organised remote working arrangements for 300 and 250 staff members respectively. This allows potential house-buyers and sellers to contact the agencies with queries by phone or online.
Virtual viewings are also replacing physical appointments, something that other smaller agencies are also starting to implement.
And Ireland is not the only country taking such clever actions. In the US, NAR issued guidelines encouraging agents to propose propose alternative marketing opportunities for their sellers’ such as video property tours including FaceTime and WhatsApp recordings.
Banks Cutting Interest Rates and Other Measures
On top of that, recent interest rate cuts instigated by several banks around the globe may help to insulate the property market from any negative economic impact.
In the UK, the Bank of England announced an emergency cut in interest rates in a bid to boost the economy. Rates were reduced from 0.75% to 0.25%, marking the lowest level of borrowing costs in the bank’s history.
The US Federal Reserve also cut rates, and while The European Central Bank (ECB) have not followed suit, it did announce a €750bn stimulus to fight the impact of the coronavirus.
As Ireland’s interest rates are governed by the ECB, no changes have been instituted there.
But the five big banks - AIB, Bank of Ireland, KBC, Permanent TSB and Ulster Bank - are offering a three-month mortgage moratorium to those affected by Covid-19 in order to alleviate financial pressure.
Anyone who is in difficulty should contact their lender as soon as possible to let them know and be directed through the appropriate procedure.
Whether all of these new protocols and changes will keep the property market steady still remains to be seen. The only constant we seem to be able to confirm right now – is that everything can change.
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