As we come out of COVID-19, the real estate market will undergo a few corrections in terms of pricing, borrowing, mortgage, interest rates and more. This could possibly make investing in a home during a pandemic a viable option.
World over, the economy has taken a beating. There is hardly a sector that is not grappling with a fallout of some sort as a result of the pandemic. In New Zealand, one of the key sectors affected is the real estate market.
Like many other economies – debt fuelled growth was bound to come to an end in the country – and COVID-19 is has spurred this on. The pandemic has been unlike any other major upheaval economies have faced over the recent years. Governments have had to spend large amounts to deal with the crisis and New Zealand could be seeing expenditure of as much as $60 billion in overall spending. How the industry fares will be dependent on how the economy emerges and the extent of business insolvencies and as well as employment situations. Property prices will be determined by this.
How New Zealand’s real estate market could be affected
New Zealand has had a robust housing market which is a significant contributor to the economy. However, a few years before the pandemic, the country introduced a home buying clampdown on non-resident foreigners. Interestingly, that did not impact house prices which continued to see upward movement.
Even during a level-four lockdown, it seems that the real estate market is fairly buoyant, with a notable increase in online property listing searches. The number of listings though have come down in comparison with previous years. Housing price deflation is bound to hit the economy at some point. Experts are predicting that this could range between 5 % and 10% lower than current rates. With unemployment being projected at a record high, this will have a direct impact on the rental market.
Home buying during a pandemic
The predictions for the real estate market may seem grim right now, but there are silver linings to be found. With the stock markets proving to be a volatile investment option right now, several people will turn to the next in line – real estate. Those who have the financial means – that is, they may have saved up what they needed to make a home buying investment just before the lockdown, could perhaps be in a better position to do so now. With prices predicted to go down, a short wait can assure you of a good deal in terms of a speculative investment.
The need to buy a home does not go away with a pandemic. The bottom line remains that buying and selling of homes will happen, as well borrowing and lending from banks for such purchases. With mortgage holidays and lowered interest rates, drastic plummeting of home prices is not about to happen. There may be a few distress sales, which is a sad result.
Another important fact is that a lot of people will want to buy homes now that the interest rates are low. This is a great investment to make to get out of the rental cycle. It is necessary to cut through all the doomsday predictions, crunch numbers anew and go ahead and make the investment. If banks work on better serviceability of loans and bring down their loan to value ratios, there will be more buyers who are interested.
Amidst all this, how technology is applied to facilitate home buying is going to make a huge difference as well.
Using technology to buy a home
These are unusual times and things are bound to be different. The way you buy a home will undergo some changes as well. Social distancing will mandate that you now will be able to view homes remotely with online open houses. Chatting with your realtor can be done on video-conferencing platforms. You may be able to view videos that are pre-recorded of the space, making use of 3D walkthroughs to understand flexibility of the home, as well as deal with interactive floor plans. Research shows that there has been a massive uptick in the use of 3D home tour features as well as video features. Some realtors are even able to offer livestreams of open houses. Even negotiations and final deal closures and arranging home insurance and the like have gone virtual.
Buying a home during a pandemic is all about making the right decisions about the investment. If you are financially secure, are able to make the most of possible lower interest rates and home pricing, and have a good deal in sight, then it would be a good idea to go ahead and explore the opportunity. Whether you are buying for speculative reasons or for personal use, never let a good deal pass you buy. And as always, the best advice for any house purchases; buy in gloom and sell in boom.