The coronavirus is knocking at the Valencia property sector’s door. This is the first post about how it is impacting on the residential Valencia property market in the short-mid term.
The Valencia property market during covid crisis will be among the most affected one. Some experts dare to predict even a 60% decrease in residential sales transactions.
The experts are agreeing that there would be a slowdown in Spain, in Europe, and in the world. They didn’t speak of a crisis, but of slower growth than we were used to. No one however expected that a pandemic such as COVID-19, commonly called coronavirus, would shake the global economy.
While we’re currently facing a systemic health-care crisis, future consequences are just starting to be visible. The real estate sector will likely be one of the most affected. The Valencia property market during the covi-19 crisis has already been affected.
2019 hit mortgage legislation
Valencia property covid crisis is coming after a slow down of the market. In 2019 the Valencia property and whole real estate sector in Spain was changed by the Mortgage Law. Perhaps not entirely, but the sale transactions have been modified.
At the end of 2019 the experts were assuring us that 2020 would bring moderation both in mortgages and the number of residence sales transactions. In 2019 the year-end balance was positive, though lower than in 2017 and 2018. Those years were the best since the crisis. The two most commonly used words among the sector’s experts were stability and moderation.
No one was expecting such crisis. Much less that it would force the entirety of Spain to stay at home. The Spanish National Statistics Institute – Instituto Nacional de Estadistica (INE) indicates that in January 2020, 47.927 residential properties were bought. It means 2.6% less than in the same month a year earlier. Ismael Kardoudi, the Head of Studies and Training at Fotocasa, explains that “the data show that the activity in the sector is recovering bit by bit, although with no greater evolution”.
He adds, that they were predicting similarities between 2019 and 2020. These predictions are now being reduced in the face of the economy paralysis caused by Coronavirus
Beatriz Toribio, an expert in the real estate sector indicates that the figures from INE show “just as it was expected”. It means a slow down in the growth.
But it was growing, although at a slower pace. In fact, the number of transactions in January 2020 (46.927) is much higher than the number of transactions registered in the majority of months in 2019, apart from May and July, when there were over 47.000 transactions a month.
The crisis is paralising the sector
Fernando Encinar, the Head of Studies at Idealista, indicates that “the figures presented by INE show little relation to the situation on the market, but is completely obsolete”. Kardoudi points out that 2020 will be similar to 2019, but “in March and the following months the number of sale transactions will strongly decrease, and we might see a fall of 60% or more in sales and purchases compared to 2019.
Encinar agrees with that and indicates that what society is facing is something completely new and unknown. Valencia property market during covid crisis is being also unpredictable.
60% decrease prediction
Some experts even predict up to a 60% decrease in residential sales and purchases. That can be also applied to the Valencia property market.
The Head of Studies at Fotocasa considers that “we’re facing an economic crisis that will start paralyzing the sector during the coming months, but we’re also expecting that later the activity will go back to the level we saw in 2019”.
Toribio assures everyone that the crisis that is about to come “will cause loss of jobs, lower demand, and will harm crucial sectors like tourism and service”. According to this expert, this will impact “ipso facto the housing market”. Although she admits that she doesn’t know the exact extent, “it will be important, especially in the first half of the year”.
Beatriz Toribio believes that in the second half of the year “everything will go back to normal”, but she is cautious. Some international institutions compare this crisis to the one that started in 2008, which means negative numbers. “The depth of the crisis is contingent on the residential sector. It’s still too early to know its range”, says Toribio.
New crisis, new technologies
The Big Data and Artificial Intelligence and cross-referencing of data from the Spanish land registry, real estate online portals and the 360 tour begins will drive the market.
We are facing a new scenario and no-one knows what is going to happen, but many experts are not admitting yet that prices are going to drop.