The impact of the coronavirus pandemic on the real estate...

The impact of the coronavirus pandemic on the real estate market and its likely consequences

The current situation

Currently, the coronavirus pandemic, the quarantine situation and the financial crisis all over the world have made everyone cautious. In particular, individuals, businessmen, investors, enterprises and also government agencies make prudent decisions. The current situation has put everyone in a difficult situation because it was not expected and happened in an unpredictable period. Small and micro-businesses are in a completely unstable situation, and many large business organizations have completely or partially frozen their activities. This problem has not escaped the real estate market. Construction companies are working at half capacity, real estate agents have retreated to houses, appraisers are on hold, banks and insurers are also looking for ways out of the situation.

Usually, the buyers in the country's real estate market were mainly investors and individuals who left the market for various reasons. The current situation in the market has prompted investors to take a wait-and-see position. They are out of the market for the time being as they face problems such as renovating the property, reselling it, and renting it out. Other groups of buyers are afraid to enter the market due to the decrease in income and the fear of losing their jobs.

Tikinti şirkətlərinin də vəziyyəti heç də ürəkaçan deyil. İşçilərin davamiyyəti natamamdır, maliyyə resursları da məhdudlaşır. Bu baxımdan bir müddətdən sonra, bəlkə də, karantindən sonra tikinti ilə məşğul olan kiçik iş adamları əllərində olan natamam və satılması mümkün olan obyektləri dəyər-dəyməzinə satıb ya bazardan tam çıxmağa üstünlük verəcək və ya da maliyyə problemlərini müvəqqəti həll edərək layihələrini axıra çatdırmaq istəyində olacaqlar. Bununla da daşınmaz əmlak bazarına bu müddətdə investisiya axınının azalacağı proqnozlaşdırılır.

In general, during the past period, during the pandemic, various trends were observed in the real estate market. In the first months of the pandemic (in January and February), when the effects of the pandemic were not yet felt in our country, but the price trend on the oil exchanges moved in a downward direction, many cautious people invested in the real estate market to maintain the value of the manat in their hands, and at that time the price trend for real estate went up was moving. In the following months, the trend stabilized in March, but in April, prices began to gradually move down. If the situation is long-term, as in other countries, our real estate market participants will switch to remote transactions.

Probabilities

In order to predict the real estate market in the current situation, it is necessary to take into account many factors, including oil prices and government support for the market. Several options can be considered: crisis, average, negative market.

I - if the current quarantine lasts until the summer months, and oil prices remain at a low level ($25-30/barrel), a significant drop in prices (20-25%) will be inevitable.

II - the quarantine ends in May in our country and in many developed countries, the prices on the oil exchanges are close to the budgeted level, and if there is significant government support for the areas affected by the crisis, the prices will remain stable and may increase by 5-6% by the end of the year.

III - the quarantine is short-term, ship prices are low, state support for construction is partially provided, and prices in the primary market are relatively low (around 10%), followed by the same scenario in the secondary market with certain delays.