The Impact of Pandemic COVID-19 on Residential or Real Estate Investment

Thank God, alhamdulillah, the COVID-19 pandemic is over, WHO (World Health Organization) has said it is no longer a global health emergency. We are all aware that this pandemic has had a major impact on various sectors in the world. One of the most affected is the property business especially real estate/ residential sector. 

The high operational costs of the property business were not in line with income, because the level of sales also fell. This condition certainly makes the property industry experienced a quite severe decline. Some economists said there will be a better possibility in property sector business after pandemic.

There are some impacts of the COVID-19 pandemic on residential investment:

1. The impact of the pandemic has affected not only sales volume, but also property demand because of many people were experiencing economic shocks, they would decide to survive than investing in property. Actually, before the pandemic my husband and I were planning to look for a new residence. However, everything changed when the COVID-19 struck. 

2. Property prices did not show a significant impact. Because the price of the property itself remains the same. In 2020 residential property prices still stable like the previous year because there was no supporting price increase from the building of the property. In fact, property price is not decreased or increased, but the problem is the sales volume and purchasing power. 

3. There was another huge and significant problem, the transactions in the housing sector have stagnated, especially for homeowner loans. The stagnation in the distribution of mortgages decreased because homeowner loans were difficult to get access to financing from banks because of the banks have started tightening credit conditions. 

Based on the article from Wall Street Journal about The Impact of COVID-19 on Real Estate Markets, Meighan Phillips (Portfolio Manager, Real Estate, Principal Financial Group®) said that what’s unique and interesting in a lot of these alternative property subsectors is just how much the investment opportunity aligns with secular changes underway in our economy.

Now we are declared to be in an endemic period. All sectors started to recover and normal. The property and real estate business is also increasing. Many are starting to invest again in the property business.

There are several things my husband and I must pay attention to, especially when investing in the property business/ real estate/ residential sector: Determining the ideal location (strategic and accessible), identifying our needs, adjusting to budget, checking the physical condition of the building & ensuring the water source, and don't forget to consult with property experts if necessary.

Property investment requires a fairly high cost. It's always good if you have funds, otherwise you need to apply for a loan. This investment is not as simple as buying a property and making money right away. There are additional costs to keep in mind: basic maintenance, annual maintenance, upgrades, and expenses like utilities and taxes. But if you want to invest in property business especially real estate or residential sector, please do the calculation.

Here, I want to help you to calculate and find out how much your monthly/ yearly mortgage payment will be based on the property price and how much deposit you have to pay. Take your first step by using mortgage payment or payment estimator. There you can get a feature which allows you to get a specific calculation with the results already filled in. You can have a calculation or estimation of your investment. Mortgage payment also usually offers overpayment calculations, loan affordability, printable amortization schedules, and a remortgage. 

When you decide to take a loan or invest, don't forget to take into your account capabilities. Everything has a cost. Make sure your finances are healthy and sufficient.