By Florian Frey

Despite statements to the contrary, many housing market experts are also unsettled by the corona virus. This is reflected both in the high number and the range of forecasts for future market developments.

 

The experts’ statements range from, “Corona will have practically no effect on purchasing behaviour and price development” to, “prices will fall by up to 25 percent in some cases”. The diversity is understandable: The more the respective players are dependent on prompt transaction turnover, the more optimistic the respective estimates turn out to be. On the other hand, those who earn their money as valuers with market analyses tend to be more cautious, if not pessimistic, with regard to both the duration and the real estate economic effects of the virus crisis.

 

The current situation is a good example of the fact that more information does not automatically lead to more knowledge. On the contrary: the majority of forecasts published in the short term obviously serve the purpose of keeping analysts in the loop and determining their positions in a way that is effective for the public. By contrast, the utility value of the forecasts for the players on the real estate markets remains manageable and decreases the more long-term the market participant is oriented. Project developers, for example, who have been planning their project for five years and want to see their apartments sold in two to three years, would naturally like to believe that nothing has changed in the anticipated market trend. Whether such assumptions are correct, however, depends on the characteristics of a pathogen that has surprised virologists worldwide on more than one occasion in the past six months.

 

From this point of view, for the time being it is advisable for suppliers to follow Angela Merkel’s recipe and to proceed cautiously on sight. This means: Anyone offering larger apartment portfolios for retail sale today should continually check whether their measures are having an effect, whether the target group is still interested and whether new groups of buyers are possibly on the way. After all, even professional groups – such as pilots – are now plagued by existential worries that used to be followed by every loan, while others see economic uncertainty as an invitation to park their long-saved money in a real estate investment.

 

As a result, current marketing concepts as well as product and pricing structures often have to be adapted faster and more frequently than the planners and initiators of a project could have imagined. In other words: More important than any forecast at the moment is the ability to quickly analyse data and to react flexibly and quickly to changes in the demand situation.

 

The author is managing director of allmyhomes