What we have noticed at first sight is that while the stock market fell by 40%, the real estate market has simply frozen in the short term. This is due to longer periods of business or simply to the transaction of the real estate: it is common for a viewing of the property to sometimes take a few days or weeks to be scheduled, however consultations and exchange of information, requests for credit and finally scheduling a notary. All this takes time and as such the property is not as vulnerable to highs and lows as the stock market.
This plays in favor of the property as an investment and will not cease to be so in the future, because the uncertainty is dangerous. The longer the property is exposed to comparison with the stock market and its ups and downs, the more it gains in the condition and confidence of the investor. As the old saying goes, "A bird in the hand is worth two in the bush". That is why we can say that (residential) real estate continues to have a stable business model. Unlike the car industry, for example, which has problems both on the supply side (lack of supply parts and employees) and on the demand side (buyers are absent due to shop closures and insecurity of income), while in real estate, for example rented out, the following applies: contracts remain in force and tenants' demand remains.
The hotspots will continue to be hotspots, however the countryside, because it has more space for the ordinary citizen and lower acquisition values of a property, may become an alternative for those who live on the cramped coast in houses and apartments, in the search for a more spacious solution for the family. We doubt that, in the future, property with less than 80m2 will be property for a family, but we believe that new concepts of living in communities with extended common spaces and green areas will attract more and more young and lonely people of various age groups.
The construction of new apartment units, as well as villas, will in the future undergo a rigorous pre-study of demand and a pre-analysis of location. Places close to large centres that were seen as comfortable because of their proximity to the workplace will be more difficult to sell, since there will certainly be greater preference for space and quality of life. In view of the large offer of real estate funds from bad loans which are being resold and which will now, more than ever, flood the market in the coming months which is mostly in these former strategic points.
Political changes, which have always been desired by some, will now have a better chance of being implemented. Assuming that, as a result of real and perceived social distortions, the housing market of the future (!) will be more regulated, there may be a new property tax contribution or an income tax reform, generating increased revenues for the state, and certainly some reform of the property transfer tax will be postponed so as not to reduce income for the state.
As far as taxes and the legislator's restrictions are concerned, such news is always bad news at first, but only in the short term. In the medium term: when restrictive policy measures want to influence the housing market, the result is, and always has been, a disinvestment in construction, thus increasing shortages. The shortage itself leads to higher rents and higher purchase prices, which then finally launch the new (privately financed) buildings again - but now again at a higher price level. The real estate sector is for long-term investors, not for the adventurous.
Text: Paulo Lopes