Promise in Areas of Europe, US Gives Canadian Housing Market Hope.
RE/MAX Canada releases insights in key global markets amidst the COVID-19 crisis
Canadian Real Estate Market Sentiment
- 56 per cent of Canadians who are planning to engage in the real estate market say they expect to do so within less than a year
- Almost half (44 per cent) of Canadians believe that the real estate market will bounce back to the strength it was before COVID-19 by 2021
- 29 per cent of Canadians believe that before the end of 2020, the Canadian housing market will return to its pre-pandemic strength
Toronto, ON and Kelowna, BC, June 16, 2020 – Nothing is symmetrical about the effect of COVID-19 on the housing market. In the same manner that Canada learned containment lessons from other countries where the virus hit earlier, we can also look to these economies to assess the potential rebound in our own economy and the Canadian housing market.
Looking at European markets that are similar to Canada in economic strength and regulatory frameworks, such as parts of Scandinavia, optimism in the Canadian housing market seems well placed. The same can be said in the U.S., where despite a national decline in sales of 20 per cent, consumer fears are beginning to subside as restrictions start to ease and activity picks up, particularly in secondary and tertiary markets.
According to a Leger survey conducted on behalf of RE/MAX Canada, 56 per cent of Canadians who are planning to engage in the real estate market expect to do so in less than a year, showing an eagerness to get back to buying and selling.
“The market has definitely seen a steep decline in the volume of transactions in the last few months, but in much of Canada, transactions have been happening and prices in particular have been resilient. Now that economies are beginning to re-open across the country and in light of some of the recent activity we’ve seen in various cities across Canada, as well as in certain European and U.S. markets, we anticipate that demand could begin to improve much faster than we initially anticipated at the beginning of COVID-19,” says Christopher Alexander, Executive Vice President and Regional Director, RE/MAX of Ontario-Atlantic Canada. “Regions such as Toronto, Ottawa and Vancouver are excellent examples, and are already experiencing an uptick in activity and the number of multiple-offer scenarios, pointing to a post-lockdown housing market outlook that is not nearly as dire as some suggested.”
As restrictions begin to ease in Europe and the U.S., outcomes are dependent upon locality and the economic conditions of a state, country, and city prior to the crisis.
Europe Real Estate Market Sentiment
- RE/MAX Europe reports website traffic is up 70% in May 2020 compared to May 2019, signalling growing demand.
- Requests from end consumers were up 63% in May 2020 compared to May 2019.
As lockdown restrictions begin to ease in countries such as Austria, RE/MAX brokers and agents in the region noted that recent demand was higher than before COVID-19 took hold, even in comparison to the same period in 2019, as indicated through an increase in website traffic (up 70 per cent in May 2020 compared to May 2019) and requests from end consumers (up 63 per cent in May 2020, compared to May 2019). RE/MAX Europe attributes this to accumulated demand that fell dormant during quarantine, but has since returned in a manner greater than has been experienced in other countries.
In Norway, which is comparable to North America in terms of real estate technology and transparency, insights from RE/MAX Europe coupled with local real estate board data indicate the market experienced its lowest level of transactions during the week of March 16, when sales declined 36 per cent year-over-year. By May 2020, sales were trending upward again, reaching levels just 7.5 per cent below May 2019 activity.
Norway experienced an initial 10-per-cent drop in listings, which trended upward to 50 per cent during the lockdown. However, by May 2020, listings returned to the market and were 18 per cent below May 2019 levels.
RE/MAX Europe believes that Norway is showing signs of stability as restrictions continue to ease and consumer confidence returns. It is estimated the market could bounce back to sustainable levels by the end of 2020.
In Italy and Spain, which were among the hardest-hit regions in Europe, real estate markets are just now beginning to reopen. Current levels of uncertainty combined with the quickly-changing environment diminishes the reliability of any forecasting in the short term.
The actual impact of COVID-19 on the housing market across all of Europe differs from country to country. Markets heavily dependent on industries hit especially hard by the pandemic, such as tourism, may experience a slower housing market recovery, according to RE/MAX Europe.
“It’s still too early to tell when the housing market across Europe will recover to pre-COVID-19 levels, particularly given the asymmetry of countries and cities concerning their economies, regulatory processes, and pandemic containment efforts,” says Kurt Lukas, Executive Vice President, RE/MAX Europe. “What we do know is that COVID-19 has shifted the practice and focus of our industry as a whole, whether that’s through the increased use of technology such as virtual tours, e-signatures, or video conferencing by consumers and real estate agents a potential shift in buyer trends, such as different types of properties; or economic resilience. While there are still many unknowns in the short-term, I’m confident that real estate will continue to be a good long-term investment, as it historically has been. There’s no question of this.”