Impact of COVID-19 on the Real Estate Sector
The real estate sector has witnessed an unparalleled boom since the end of the 2008 recession. Governments all over the world have followed loose monetary policies in the aftermath of the previous recession. This meant that the money supply all over the world increased by leaps and bounds. Most of this newly created money found its way into the asset markets and ended up creating new bubbles. The real estate market was one such market. Just before the coronavirus crisis struck the world, the real estate sector was witnessing a period of stagflation. The prices had reached unprecedented peaks. However, there were no buyers in the market who were actually transacting at the quoted prices. Hence, the market was characterized by artificially high prices and no transactions.
The coronavirus has caused all the financial markets in the world to crash. Most stock markets have lost about 40% of their value. The real estate market should not be an exception. However, since the market is illiquid, the fall in prices is not visible yet. However, soon the real estate sector will witness the many negative effects of the COVID-19 crisis.
In this article, we have listed down some of these effects which the real estate market is likely to face:
To sum it up, the real estate sector is going to be one of the biggest losers from this coronavirus crisis. The price of its current inventory will fall, the funding will dry up, and customers will desert the market in the next few months.
Authorship/Referencing - About the Author(s)
The article is Written By Prachi Juneja and Reviewed By Management Study Guide Content Team. MSG Content Team comprises experienced Faculty Member, Professionals and Subject Matter Experts. We are a ISO 2001:2015 Certified Education Provider. To Know more, click on About Us. The use of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to ManagementStudyGuide.com and the content page url.