The health, social, and economic crisis has caused, on the one hand, a drop in the price of second-hand properties and, on the other, an increase in new construction.
For the real estate sector, the coronavirus crisis has been the closest thing to a wrecking ball. Home sales plummeted 24.6% during the first half, investment fell 30% (from 12,000 to 8,000 million) and prices fell for the first time in four years to 4.9%. These negative data for the brick business, published by the National Institute of Statistics (INE), the General Council of Notaries, and the CBRE Real Estate Consultant, also reflect an opportunity for those who are studying to buy a home. However, in this context, some doubts arise:
- In what type of properties have prices fallen the most?
- What are the requirements and gaps to fill in the real estate sector now?
- Lastly, the most important, what choices are readily available for a physical visit and tours of the property?
What is The Position of The Real Estate and Property Sector Now?
Most experts point out that the fall in the price of houses (due to the low demand caused by the current crisis) is a trend that will continue to be present, at least until the beginning of 2021. The moment in which some specialists point out as the beginning of the normalization and stabilization of the activity.
For this reason, a property can now be purchased at a lower price than a year ago. Data from real estate SkyMarketing Islamabad suggest that during the first six months of 2020 prices have fallen by 4.9%.
The fall in prices does not affect all properties equally. Data from the General Council of Notaries indicate that while the price of second-hand flats fell 3.3% year-on-year in June, that of new flats rose 5%. Regarding the purchase of plots, the price in the same month stood on average, a fall of 19.5% year-on-year.
The increase in the demand for new construction properties is one of the main reasons for the rise in the price of this type of house, which tends to be larger and has more community services.
Since the end of 2019, the purchase of these properties has led to a boost due to several legislative advantages: such as more purchase guarantees (when the property is being built), and constructive ones that, unlike most second-hand homes, incorporate energy efficiency systems (which means considerable savings in electricity bills).
After the pandemic, buyers are looking for homes in the suburbs, larger and with more community services such as swimming pools, parks or terraces, attributes that new construction homes fulfill, which is the type of property that is sold in these areas.
This, together with the fact that this type of property is a more profitable investment in the long term, justifies its price increase.
New Priorities After The Covid-19 Pandemic Situation
Sales and, therefore, the price of homes are not the only thing that has been altered by the pandemic, but also the preferences of buyers when choosing a home.
Confinement and labor changes such as the introduction of teleworking have caused citizens to look for houses with open spaces (balconies, terraces, patios …) and close to green areas.
This interest has grown to 23% in people between the ages of 25 and 40, according to the study the impact of confinement on the demand for housing of young people, published by the real estate Blue World City. Therefore, being in the center of cities is no longer so requested, according to data from the main home search engines.
Many specialists point out that the demand for housing in medium-sized cities or even in rural settings can also increase due to teleworking. The real estate manager of Capital Smart City recorded how at the end of June, home searches soared 100% in Islamabad and 240% in Karachi two of the cities in Pakistan. Some real estate companies have launched offers to buy in peripheral areas, the coast, and in second homes with discounts of up to 30%, which can also be an investment opportunity for the future.
This trend is driven not only by the lower prices in these areas but also by the cost of the Property Tax (IBI), more affordable than in large cities. This last point, frequently forgotten when buying a home, is very relevant, since it refers to a series of annual payments that the buyer will have to face when acquiring a property.
Virtual Visits are Necessary to Choose a House
The final decision to buy a house, whether it is new construction or a second-hand one, has always been conditioned by the visit to find out its condition and the neighborhood in which it is located. For the real estate or the individual who makes the sale, it is also a key point to give confidence to your client.
This procedure has been greatly affected by the pandemic because it involves following strict health protocols and generates fear of contagion in many potential buyers.
To solve this, many real estate companies are offering 3D virtual tours, extensive videos with which you can observe all corners of the property, and video calls with the agents (while they show the house and explain the details of the acquisition).
Expense While Buying a Home
Legal institutions whose main purpose is to provide public and solemn acts of the constitution, transformation, modification, and termination of ownership and real rights over real estate. Registrar fees are also known as fees.
There is no Registry in all localities and we assume that its distribution was similar to that of the Judicial Parties.
With the inscription in the Property Registry, we obtain full legal security of the transmission, eliminating through the notary the null, abusive agreements and those that are personal.
They are registered in the registry, the deeds of purchase and sale, inheritance partitions (they imply property), mortgages (mortgage right), rights of easement, usufruct, bare property, liens, etc.
We must first go to the Property Registry, to find out if the home we want to buy has any burden or encumbrance, and the document issued for this information is the Simple Note of the Property Registry, which has a small cost.
Financial entities carry out these procedures for us when contracting a mortgage since their collection depends largely on the fact that the property, the mortgage does not have any burden.
In mortgages, the Tax is accrued for second-hand homes. Tax on transfers of heritage that involve an exchange of goods. The applicable rate is 6%.
The Tax on Documented Legal Acts is also accrued, this tax is levied on the deeds of incorporation of mortgage loans. It must be paid for the fact of formalizing the public deed. Currently, the applicable tax rate is 0.5% of the value of the mortgage guarantee and is paid by the buyer to the Treasury at the time of acquisition.
This amount of the total mortgage liability is made up of:
- The loan amounts
- A legal maximum of interests, which varies depending on whether they are fixed or variable
- A maximum legal interest on late payment
- Ancillary benefits (to meet various expenses in the event of non-payment of the loan, such as community, contributions, etc.)
- An amount in anticipation of unpaid expenses for attorneys and attorneys.
These initiatives not only solve a problem generated by the coronavirus but also open a door to the technological world that, until now, the real estate sector had not crossed. With them, buyers can save time when visiting properties in different parts of a city or province and the company can reach more customers thanks to digitization.