When taking the past 1 and a half years into account, one would be very hard-pressed to find an industry left outside COVID-19’s path of destruction. Although air travel was impacted the most, significant damage was also done to the real estate market in the early months of the pandemic’s outbreak in the West.
As lockdowns were imposed in March and April of 2020, countless nations were plunged into a recession. Furlough schemes and layoffs left many professionals in uncertain financial positions. This resulted in individuals who were previously interested in purchasing hard assets like real estate pulling out of deals, resulting in a stagnant real estate market.
With the world starting to recover and slowly return to normality, the global real estate market’s current status quo is changing in ways previously unimagined due to the pandemic.
Soaring Suburban Home Prices
With most office workers eschewing the uncertainty of their potentially unsafe office spaces and instead preferring the safety of their own homes, an unprecedented increase in demand for homes and a historically low supply of available units has resulted in a suburban real estate boom!
Rising global real estate prices are also generally acknowledged by financial analysts too, who note that the cost of buying a home has surged to levels last seen 15 years ago.
In the United States, the increase in house prices was extremely notable, as they were the highest they have been in 3 decades. A mass exodus from city centres to less populated areas and rising lumber prices (a material heavily used in house construction in the US) is credited for this increase.
A similar phenomenon is observed in Australia as well, where a ‘neglected’, ‘uninhabitable’ home ‘in need of major work’ recently sold for a staggering $3.5 million, 4 times more than the initially anticipated value. The home in question lacks all basic amenities such as a toilet, kitchen and power, and is located 4.4 miles outside the megacity of Sydney.
A Gradual Cooling Down
Property prices cannot be expected to continue climbing as they have in recent months; as such, a gradual cooling down is only to be expected.
In the United States, new home building activity has decreased by 7% in July this year compared to June, with many financial analysts considering this to be the start of a gradual cooling down of the housing sector’s boom.
Nevertheless, many real estate agents note that although house sales have decreased in comparison to last year, this year’s July sales are still the second-highest on record, suggesting that the housing market’s property boom still has a lot more life left in it.
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