How the Coronavirus can Affect the Housing Market

Climate and environment blog

This week, the Coronavirus has shaken the stock market with relatively large declines around the world. But how does the Coronavirus, COVID-19, affect housing prices and how should you think as a seller and buyer?

Previous unrest such as the 2008 Lehman crash and the Euro crisis in 2011 led to falling housing prices. But it is too early to say whether the concerns about the Coronavirus will cause a fall in the housing market. If you buy and sell in the same market, price development has a more limited significance. Today, there are significantly more people selling before they buy and then a price drop can even be advantageous.

Still today, the market as strong, but it may change in the future. If the spread and the unrest increase, it is mainly because the market psychology will be more negative that the housing market will be dampened. Already, we are seeing a direct effect on the stock market where prices are going down as it becomes more difficult to trade across borders and harder to produce when components come from other countries.

However, at least not at the moment, the link between troubled stock exchanges and the housing market as particularly strong. But the direct effect of the stock market downturn is small, as few people buy a normal home by selling shares. The conditions for borrowing money for a home are what determine.

In the longer term, the Coronavirus may even prove to be an advantage precisely for the housing market. If the virus dampens the economy, we will be able to keep the uniquely low-interest rates longer than otherwise. The virus could even cause interest rates to be lowered again if the economy needs to be stimulated.

Be the first to comment

Leave a Reply

Your email address will not be published.