The real estate market after the pandemic. International experience

23rd April 2021

All countries are feverish — some from the virus, some from the crisis. Here I discuss what is happening in the real estate market? Let’s look at foreign examples and compare them with previous epidemics.


China was the epicenter of the virus, and now, everything ends, gradually people return to normal life after quarantine.

According to data on the real estate market in 30 major cities in China, the average level in the third and fourth quarters of 2019 was at the level of 5-6 thousand transactions per day. Since the introduction of the quarantine on January 23, the real estate market in closed cities has stopped, sales have fallen to zero, and in the whole country-by, almost 35% compared to last year. As the situation began to stabilize, from mid-February, the number of transactions gradually began to grow and by April 1, it recovered at the same level. Now, according to Chinese media, the transactions have already exceeded the level of the fourth quarter of 2019 by 1.5 times.

The real estate market can not be closed, people still sell and buy apartments, because they need somewhere to live, need money, or for other reasons. The temporary lull caused pent-up demand. And the catalyst was also the help of the state — prices for new buildings were fixed, the Central Bank of China lowered its main interest rate on loans.

For example, in Shanghai, the financial and trade center of China, at the end of January, a minimum of 62 sales per week was recorded, and in March their number increased 20 times, to 1,374 per week (data from Sou-Fun CREIS and Capital Economics).

Developers, as in any business, have problems with liquidity during stagnation, so as soon as the recovery began, the primary market began to give discounts that reached 25% to encourage buyers and quickly go on sale. People returned more actively to the real estate market than to restaurants and entertainment. The phrase “my home is my fortress” has become even more relevant in the current conditions, people need real estate more than cafes and restaurants.

Hong Kong

In 2003, there was an epidemic of SARS (SARS) in Hong Kong. During the epidemic, the volume of transactions fell very much, but then recovered at the same level. The crisis affected prices locally, the trend slowed down, but after the epidemic continued to decline.

In 2020, the Hong Kong authorities did not impose a strict quarantine, although many work from home. Therefore, the market situation is changing smoothly. In January, there was the lowest number of transactions — 2762, in February the figure rose to 3572. The share of sales of new buildings in the total volume also increased from 21% in December 2019 to 28% in February 2020. This is due to discounts from developers and very low mortgage rates (the Hong Kong Monetary Authority reduced the rate to 0.86%).

Patterns of epidemics

Zillow Research compared previous epidemics and the current situation and identified some quantitative patterns.

During epidemics such as the 1918 flu or the 2003 SARS outbreak, economic activity fell sharply during the spread of the epidemic (a temporary impact on GDP or industrial production of 5-10% during the epidemic) but quickly stopped when the epidemic ended.

The current situation is different from a standard recession, which is a situation in which economic activity falls for 6-18 months and then recovers more slowly.

During SARS, housing prices in Hong Kong did not fall significantly, but transaction volumes decreased by 33-72%, as customers avoided contact with people. After the epidemic ended, transactions returned to normal volumes.

During the current quarantine in China, early news reports show that house prices have not fallen much, but transactions have almost stopped.

Until February 2020, leading economic indicators (jobs, yield curve, interest rate spreads, and economic sentiment index) gave mixed signals about the risk of a standard recession this year. At the same time, market rates (PredictIt, 2020) give a probability of 30% in December 2019 to 15% in January 2020, with a smooth increase to 44% on March 1. PredictIt forecasts a contraction in GDP for at least two consecutive quarters.

The forecast of the likely decline associated with the pandemic will depend on the level of progression of the virus and the response of national governments.


The US real estate market experienced a sharp turnaround in March with the announcement of the emergency regime. Back in early March, the housing market was very strong. Supply declined by 8%, while prices rose for several months in a row and in February rose by 7% compared to 2019. But by the end of March, everything had changed. Prices continued to rise, but the rate fell to 3.3%. As in Hong Kong, the epidemic crisis does not affect prices much. And home sales fell 9%, the biggest decline since 2012 (Redfin data). The largest drop was recorded in the state of New York, up to 18.5%.

Demand for home purchases in early April fell by 34% compared to the pre-coronavirus period. Real estate transactions have almost stopped in some parts of the country. The transactions that take place are agreed upon by the seller and the buyer even before the economy has been blocked. Buyers are delaying their plans because of the uncertainty with the virus, work, and the instability of the financial markets. For sellers, the situation is ambiguous: on the one hand, the supply has decreased, and prices are holding up; On the other hand, with high unemployment, it is more difficult to get a mortgage, which can limit consumer demand.

The emergency regime is still in effect in the United States, and we now have the opportunity to simultaneously monitor how the US and Russian real estate markets will recover from this crisis as quarantine measures weaken.

Many young people and students are concerned with the situation on the real estate market. In addition to that, every student may get stuck with the writing assignments at College. In this case they can buy essay, or any other academic paper.