The real estate market rewards those who watch for trends. Several interesting patterns have emerged in the international market, from Coronavirus to political shifts to changes in consumer preferences. All those trends have the potential to impact the market, and investors should keep a careful eye on them while building their portfolios.
Impact of Coronavirus on Real Estate
On Thursday, March 3, 2020, mortgage rates in the United States tumbled to an all-time low. Traditionally, lower mortgage rates boost home sales. However, global market instability and limitations on travel make it impossible to predict if these low mortgage rates will be incentive enough for potential buyers.
In Canada, evidence from 2003 suggests that the housing markets did not experience an adverse impact from SARS. The effect of Coronavirus is likely to be moderate in the short run.
We could see an impact in the short term on the luxury markets; however, long-term demand from foreign buyers is likely to see a boost. Short term, this could be an opportunity for local buyers as the competition from foreign investors decreases due to global travel restrictions.
Politics Drive the Market
Governments have a significant impact on the real estate market. For example, Brexit is poised to change the course of Britain’s economy. A bad Brexit deal could lead to a considerable drop in real estate prices in Britain. The market has already shown some signs of a downturn, and that is likely to continue in the coming year.
On the other hand, Germany’s remarkable economic stability is still attracting investors. The country offers sound investments without the risk of massive, unpredictable changes that can be found in some other markets. The same patterns show up all over the world. Some nations are riskier than others for investors.
Citizenship and Residency Spur Demand
Some properties are gaining value because they offer a route to residency in a nation. For example, both Malta and Cyprus have systems that allow investors to gain residency or even citizenship through their investments. Greece offers a similar program. Those countries can be appealing choices for investors who want to relocate to a new nation while still getting a decent return on their investment.
Urban Housing Patterns are Changing
People will always need a place to live, but their housing preferences do change over time. Investors can often get excellent returns by offering units that appeal to those changing tastes.
Many people are looking for micro-apartments. Those units are tiny, but they are a perfect fit for young students, travelers, and other people who live alone. People choose to live in micro-apartments because they are much cheaper than traditional housing. That is especially true in the world’s largest cities because those cities tend to have a high cost of living. It can be hard to break into those markets due to the value of the initial investments. On the other hand, high demand means that there are plenty of chances to make a profit.