Real Estate Property Markets Canada & It's Effect by Covid-19

SYED MAHMOOD NAQVI

Vice President | MB Enterprises

The Real estate sector in Canada has been undergoing some serious impacts because of the latest developments from the COVID-19 scenario. These impacts are related to the pricing strategies in real estate and changes in Govt.’s policies. However, some positives have been figured out in the midst of the spread of the COVID-19 pandemic. There are millions of Canadians in the non-essential workforce that are working from home. There are restrictions and bans imposed by the Canadian Govt. to visit business and public places.

THE IMPACTS ON REAL ESTATE OF WORK FROM HOME:

Working from home has outlaid significant impacts on the real estate sector in Canada in just a matter of a few months. This is largely because of the reason that most people in Canada are restricted to their homes & the property prices have raised especially in the commercial sector. The real estate industry in particular is a prime example of the current circumstances and the need to take drastic measures to adapt to scenarios of ‘Business as Usual’. A term that determines how businesses must take place under normal circumstances. There are also some key changes in the way agents operate in conditions of work from home, because of the uncertainty of how the markets will perform in the future.

According to the experts, it's hard to make predictions and evaluations like before. The question is “What can buyers and sellers expect from the markets during these most unpredictable times?”

THE LONG TERM EFFECTS:

How long will it take for the market to bounce back? That's a question needs to be asked by investors in the Real Estate business. It can take a year, two or even three years. That's not the question. however, What's concerning is how long these effects

will have on the Canadian Real Estate sector and the damage it has done.In fact, the reality says that the fundamentals of the market i.e. particularly in the GTA and other major urban centers don’t change.

What’s more affected is the attitude of the buyers in the Real Estate business which cannot be affirmative unless things get better. The pessimist attitude means buyers in the Real Estate markets are looking for things to get ‘Back to normal.’

FEARS OF A GLOBAL RECESSION:

Having the fears of a global recession is why most people’s attitudes have changed towards investments in the Real Estate sector. A global recession, like something that happened in Canada in 2008/09 and impacted the Real Estate sector is the fear of most people. This financial recession has not only impacted the attitudes, however, most interestingly it’s hard to predict a property performance. Therefore, the levels of risk associated are more than what they could have been under the normal circumstances.

LIMITATIONS FOR CONSUMERS IN THE REAL ESTATE:

There are limitations for consumers in the real estate ssector and these limitations are in the form of pricing strategies. The change in consumer’s behaviors means changing trends of the real estate market is affecting the consumer’s psychology.

Other limitations include the purchase of cottages for holidays and the limitations imposed on rental properties due to fluctuations in purchase price. The consumer’s limitations also includes property predictions, as they are hard to make in these current times. They are unable to determine and evaluate the risks involved especially in buying and selling.

POSITIVE CHANGES IN GOVT’s POLICIES- CECRA:

The changes in Govt.’s policies are mostly linked to COVID-19, the current pandemic for business owners. It has proved to be something positive after seeing so many lows because of the current pandemic. CECRA or Canadian Emergency Commercial Rent Assistance, provides relief for small businesses that are experiencing financial hardships in paying for their business property rent. This is a huge step from the Govt. to stabilize the situation in times of the pandemic, COVID-19. The program offered by the Govt. of Canada is also valid for those who have entered or will enter into a rent reduction agreement. Rent reduction, yet another positive amongst the Govt. policies, is helping people reduce their rent payments through 75% payment re-reimbursement from the Canadian Govt. scheme known as CECRA.

Yet another positive that has been seen due to the pandemic COVID-19 is the decline in interest rates has gone below 2%. The opportunity comes very rarely and can be seen as a good prospect to invest and gain the advantage.