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Impact of COVID-19: Disparity in global real estate markets

Adfenix CEO André Hegge continues to regularly analyse data on the impact of the COVID-19 pandemic on property markets around the globe. Studying the critical time frame between mid-March and mid-April has revealed significant but not altogether unexpected insights.

Since our first published analysis on 19 March the impact of COVID-19 has revealed more disparity in the global real estate market. The six weeks of data gathered from 12 March to 16th April has certainly shown a ‘tale of two’ correlated to the effect of the virus relative to population numbers, the volume of cases, mortality rates and containment measures.

It’s also undeniable that the resultant effect of government policies in terms of how real estate professionals have been allowed to conduct business have significantly influenced the market conditions that we have been studying – Australia, UK, Sweden and the US.

Methodology:

Some of the key indicators used were listing volumes; web visitors who browsed properties for sale; homebuyers who contacted an agent to view a property via their website.

The lockdown effect

Australia has relatively successfully flattened the virus curve via a lockdown strategy that has seen the country operating only essential services with limitations on travel, etc. Real estate businesses have been allowed to continue operations remotely and also conduct 1:1 in-person viewings (limited to 2 people inside the premises) in all states and territories.

  • Residential listing volumes are currently down 32% relative to the period before the COVID-19 outbreak. However, national interest in property remains strong with only a 4% drop recorded in visits to agency websites.
  • Effectiveness of social advertising has increased by ~20% with campaigns enabling agents to continue seeing prospective buyers viewing their listings – the very small drop in website visits (4%) can be widely attributed to the high return value of social media traffic.
  • Viewing, contact and appraisal sign-ups have decreased by 22% in line with the listing volume decline.  
…effect of government policies in terms of how real estate professionals have been allowed to conduct business have significantly influenced the market conditions

Sweden is currently defying the global market trend in more ways than one. Deploying a different strategy has allowed real estate businesses to operate with relatively few restrictions, although many have adopted work from home policies and reduced hours.  

  • Our data shows that the Swedish market is truly bucking the trend and listing volumes are actually up 30%. This spike can be attributed to the seasonal pattern of significantly increased listing volume before Easter break. We expect listing volumes to return a normalised dip in the May analysis of ~10%. Anecdotally, what we are seeing is homeowners wanting to accelerate their property sales in this period resulting in an early spring selling season this year. 
  • Website visits have decreased by 4% at this time
  • Reaching homeowners via social media advertising is currently ~ 15% more cost-effective as there is less competition from lifestyle, travel and other advertisers on Facebook and Instagram to reach them.

In the last 4 weeks, the UK market has come to almost a complete standstill but there are encouraging signs that there is some resilience in the market. Real estate professionals in the UK have effectively been put into a holding pattern on closing sales that are not yet conditional and also pursuing new listings. As such the data reflect this situation with a huge drop in listing volumes in a very short period. 

Across all markets, reaching homeowners via social media advertising is currently more cost-effective as there is less competition from lifestyle, travel and other advertisers

US industry analyst, Mike Del Prete is suggesting a ‘check mark’ recovery curve for the US market – typified by a severe and immediate drop lasting 3-4 weeks and a gradual recovery. As this appears to typify what has happened in the UK it may be a good way to consider what the recovery in the UK might look like.

  • Residential listing volumes are currently down 75% relative to the period before the COVID-19 outbreak. 
  • Website visits have decreased by 60% at this time. Encouragingly though viewing, contact and appraisal sign-ups have only slowed by 30% which is significantly less than the listing volume decline.  
  • There is a significant decrease in the cost of advertising property listings on Facebook at the moment as there is almost no competition from other lifestyle/brand verticals. 

Similar to the UK downturn, the US market has seen a downturn in listing volumes as different states issue mixed requirements for citizens and realtors, including some “Stay In Place” orders. The National Association of Realtors (NAR) have encouraged digital viewings over in-person visits to properties for agents who have been able to continue business.

  • Residential listing volumes are currently down 67% compared to the period before the COVID-19 outbreak which variations between 40-80% according to the region relative to the timestamp of the outbreak.
  • Inverse to the UK data, website visits have only decreased by 25% at this time as property ‘shopping’ is still something people are doing during lockdown although form completions/sign-ups via website interaction have slowed by 50%.
  • Reaching homeowners via social media advertising is currently ~25% more cost-effective as there is less competition to reach them.

Where to next?

There is still much uncertainty as we navigate working in, through and around COVID-19 for the real estate industry. The data we analyse changes from day to day so all figures are more indicative rather than 100% current when you read them. 

In the US, website visits have only decreased by 25% at this time as property ‘shopping’ is still something people are doing during lockdown

It is acknowledged in business theory that those who continue to market themselves and show they are 'open for business' (however they can!) during tough times are the ones that survive and thrive when the rebound happens. What that currently looks like for our clients is different globally but with certainty, we can see that there will be a rapid and transformative change ahead for the property industry.

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