In 2019 a significant number of sales transactions of apartments in Chisinau. 22 187 apartments were sold, which is 40% more than in the previous year. Demand was higher because the supply affected the increase in apartment prices. Will this trend continue in 2020?
The first effects of the COVID -19 pandemic on the real estate market
The first effects of the coronavirus pandemic are already beginning to be felt in Chisinau. Owners of apartments have become more restrained, are not in a hurry to sell their homes, do not allow potential buyers to participate in demonstrations due to restrictions imposed by the authorities.
Potential buyers who were looking for homes also complied with the authorities' decisions and began to restrict their travels.They temporarily delayed their plans to buy real estate until the current crisis is resolved so as not to expose themselves to the risk of infection and prevent the spread of a new type of Coronavirus infection.
At this moment, we are witnessing a phenomenon of freezing real estate transactions, respectively, we cannot talk about the decrease or increase of prices for apartments in Chisinau.
How will the economic phenomena affect the prices of apartments?
If the economic and social phenomena will have a negative trend for a long period of time, we may have a crisis in the real estate market. A crisis that could overwhelm the prices of apartments on the local and global market.
Cessation of economic activity in the long term (at least 6 months) because of the pandemic will contribute to the growth of unemployment. Many people will lose their jobs because employers will not be able to pay their wages on time, and they will have to cut costs to cope with this crisis.
Scenarios that could help increase the prices of apartments
The scenarios below could contribute to a slight increase in demand as well as prices on the real estate market in Chisinau following the current crisis:
- Returning diaspora abroad - our citizens abroad who will lose their jobs, they will have to return home to overcome the crisis effects. Some of them, who have certain savings will opt for the purchase of an apartment in order not to lose money due to inflation.
- Delaying the commissioning of residential complexes - some construction companies might delay the commissioning of residential complexes under construction. Also, the real estate developers will not start new constructions, they will focus on protecting existing investments and continuing the current activity. Thus, there will be fewer new buildings that will be delivered in the near future in operation, and as a result demand for apartments in new blocks will increase. We can expect prices for new apartments to increase in the coming period.
Scenarios that could help lower the prices of apartments
The scenarios below could contribute to lower demand and prices for apartments in Chisinau following the current crisis:
- Mortgage loans in progress - many people who will lose their jobs will no longer be able to pay the monthly mortgage rates for the bank. Banks will have to market real estate below the market price in order to return their money.
- New mortgages - even if banks try to provide more accessible lending conditions, due to the crisis, few people will risk taking a long-term loan. In 2019, almost 35% of the total number of apartments were purchased through a mortgage loan. In 2020, in the event of an economic crisis, the number of mortgage loans will decrease, and with this the demand for real estate.
- Investments as a form of business - a part of investors who bought apartments at the construction stage to resell them more expensive, guided by the panic that the economic crisis may impose, will try to sell their real estate as quickly as possible, at a price, respectively smaller.
At the moment, things are just beginning and it is difficult to estimate the impact of the epidemic on the real estate market. It will all depend on the actions that the authorities will take but also on the responsibility of each individual.
If the central authorities will provide aid for small and medium-sized businesses in the form of subsidizing employees to ensure the retention of jobs, the unemployment rate will increase non-essential, respectively less negative effects will be registered on real estate prices and not only.
What is the responsibility of each individual, this would mean respecting the social distance of at least 1.5 m as well as personal hygiene. It is for this reason that it is important for everyone to be aware that it can be the cause of the virus, and that they leave the house only for strictly necessary purposes.
Conclusion
If we take into account all the factors listed, but also the fact that each other will complement, we can expect that the prices for apartments in Chisinau in 2020 will remain stable, as well as the need for sale-purchase will remain unchanged.
*Social responsibility
We, Acces Imobil company, have complied with the decision of the authorities to suspend our activity during this crisis produced by coronavirus, in order to protect the health of our employees and customers. The activity of our real estate agents during the quarantine period is limited to the discussions with the clients by telephone, and all the presentations of the buildings are postponed until the solution of this crisis.
On this occasion, we call all the real estate companies that are still operating during the pandemic time using "innovative strategies to attract buyers" to refrain from the activity so as not to endanger the lives and health of employees and customers.
It depends on each one of us what will be the effects of this crisis on the real estate market and not only.
