Paris, Vienna, Madrid, Athens, Rome The lockdown fires the wanderlust. The desire for carefree holidays, preferably in the safety of your own four walls, grows with the quarantine every day. But the pandemic is also fueling uncertainty. Closed borders, the fear of the deepest recession in the post-war period and the fear of a second wave of corona deeply worry people.
The European holiday property market is moving between these two poles these weeks. The experts are expecting falling prices, especially in the southern countries. In the long run, however, the market could benefit from the growing longing of the city dwellers for rural idyll.
Your own house on Lake Garda or on the beach in Sardinia, an apartment in the middle of Venice or Florence? The offer is there, despite the corona crisis. The largest Italian real estate portal Idealista currently has 785,655 properties on offer. An example: For a square meter price of 1,300 euros and the possibility of a loan over 30 years, a villa with nine rooms and six bathrooms is for sale in the middle of the Chianti area. The ad is virtually possible, the ad says. However, the property has been online for a long time.
No wonder. The real estate market in Italy collapsed after the strict lockdown – and with it the sale of holiday homes. The year had started well. The proportion of foreign buyers in the first three months was 6.3 percent, reports the agency Tecnocasa. In 2019, the real estate business with foreigners even achieved a record with more than twelve billion euros and an increase of 37 percent over the previous year.
But then came the curfews and the closing of the borders, and that means no visits and consequently no buying decisions. The business has stood still until now. It’s slowly picking up again. The industry encourages itself: There is no shortage of demand, according to the property company Gardahaus, which has half German customers. As soon as you were allowed to travel again, there would be the first viewing appointments, says managing director Winston Sinibaldi.
So far, the corona crisis has not had an impact on prices – that may still happen. “There are bargain hunters who are now hoping for a good deal,” says Sinibaldi, “but prices are not falling – not even after two months of the crisis.”
It was the same in 2008, when prices did not drop until a year or two later. The figures from the research and consulting institute Nomisma confirm the trend. A decrease of one to three percent is forecast this year and a decrease of three to ten percent in 2021.
Alongside Italy, Spain is one of the countries in Europe that has suffered the most from the corona crisis. The rating agency Standard & Poor’s therefore assumes that prices will decrease by 3.2 percent nationwide in 2020. It bases its calculations on how much a country has been affected by the pandemic and how much the national government can limit job and income losses. Spain does poorly on both counts.
For holiday properties, Constanza Maya expects an even greater drop in prices: The head of business for Spain, Portugal and Andorra at the real estate agency Engel & Völkers expects a minus of ten to 15 percent this year for Spain. “Banks are currently valuing holiday properties up to 20 percent lower than before the corona crisis,” she says.
In contrast, prices remained stable for particularly attractive facilities such as houses directly on the beach. Maya believes this is a good time to buy in Spain this year. “We are currently seeing the biggest discounts because so much is still uncertain,” she says. For the coming year, she expects prices to rise again in the third quarter.
Prices are under pressure due to the financial hardship of some sellers and uncertainty among buyers.
Owners who lose their jobs sell their second homes on the coast, as do some heirs whose parents have died from the virus and have left them a house. This increases the offer. At the same time, the borders are still closed and many interested parties are wondering whether they can even travel to Spain this summer.
Within a few days of the exit from the shutdown on May 11, numerous luxury properties found a buyer. Alexander Kraft, head of Sotheby’s International Realty France, said: “There was a lot of activity among buyers and sellers in the first days of the exit.” Luxury real estate is still in demand. However, there is uncertainty about the situation on the real estate market because it is not certain how the corona crisis will continue.
Before the crisis, property prices across France had increased on average by 3.6 percent within a year. The brokers are currently expecting a negotiating room of up to ten percent down.
A new trend appears after the shutdown. Because many people felt trapped in the big cities, they are now looking for a second home in the countryside, which could spur the holiday property market. “The second house in a city that can be reached by express train in a few hours could be the winner of the real estate market,” predicts Michaël Benchabat, President of the real estate specialist MeilleursBiens.com.
He names cities like Nantes, Rennes, Bordeaux, Lyon or Marseille. André Yché, President of CDC Habitat, also sees small towns or the country house on the move: “Families can buy there for a fifth of the price of their current residence.”
“Foreigners seek refuge in Greece from the virus,” reported the newspaper “Kathimerini” these days. The country scores with the fewest corona diseases of all European Mediterranean countries. According to the real estate portal Spitogatos.gr, searches by foreign interested parties rose by 19.3 percent in April compared to the previous year. Demand is particularly brisk in Germany.
Greece can now exploit the advantages of the successful corona strategy, says Marios Christodoulou, co-owner of the mediation platform Ferimmo.de. He too is watching increasing demand from German interested parties.
Since Greece has recovered from the ten-year financial crisis, foreign capital has been flowing massively into holiday properties. According to the Greek central bank, foreign property buyers brought in 1.45 billion euros last year. Compared to 2016, the investment sum has increased sixfold.
The time to start is now favorable, says Dirk Reinhardt, partner in the Athens law firm MStR-Law, which looks after German property buyers. Because of the limited mobility of buyers and the decline in short-term rentals such as Airbnb, prices are under pressure. “As a buyer, you have to bargain hard and grab it quickly before the demand increases,” advises the lawyer.
Apartments in Greece are also in demand as investment properties. Interventions by the government are causing uncertainty. It imposes a 40 percent discount on tenants affected by the corona lockdown – a massive encroachment on the freedom to contract.
Those interested in vacation properties between Lake Constance and Lake Neusiedl will be disappointed. The corona crisis and the temporary closure of the borders between Austria and Germany have not led to a discount. On the contrary, the geographic proximity to Germany even benefits the Austrian market.
“In general, the demand for residential properties in rural areas has increased in the wake of the corona crisis, and this also applies to holiday properties in Lower Austria and Burgenland,” said Peter Weinberger, spokesman for Raiffeisen Immobilien Austria. “For Vienna, too, we expect that vacation properties will be in even greater demand as an alternative to hotels than in the past.”
The increased interest is fueled by the frustration of many vacation property owners in other countries. Owners of villas and apartments in Mallorca or Sardinia, for example, are in the bones that they have not been able to use their property for months. That benefits the market in Austria. “The proximity is certainly a great advantage,” says Bernhard Reikersdorf, managing director of the real estate agent Re / Max Austria.
Despite the pandemic in Austria, bargains cannot be made. “The prices for residential and holiday properties are currently stable,” said Raiffeisen real estate expert Weinberger. “If demand continues to grow, there may very well be regional increases,” he predicts.
In addition to geographical proximity, security, health care systems and stable value also play a major role for holiday home buyers. “Because all of this is guaranteed, Austria is currently the most attractive country for property buyers. And of course that also has an impact on real estate prices, ”emphasizes Thomas Hopfgartner, head of Carinthia’s real estate company Living De Luxe.
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