I am about to buy an apartment (in a major city in central Europe) to live in, mostly with borrowed capital (around 80%). The price was set before the financial crisis due to the corona virus started. Should I change my plans? Is there any possibility of saying whether the crisis also had an impact on the real estate prices so far? My personal situation is stable in the sense that my job is rather safe despite the crisis. Should I continue to buy the apartment as planned?

Note: I am aware that the future cannot be predicted, what I want to find out is the following: Since the price for "my" apartment was set before the corona crisis started, is there already any evidence that the real estate prices in major cities in central Europe have taken a hit? I.e. I am not asking about the future development but rather about a comparison of the situation before the corona crisis to the present situation. It would also be interesting whether in the past the stock market was correlated with the real estate prices, particularly during / after crises.

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    Nobody can predict the future, and you are going to get all kinds of responses from the extremely panicked with lots at capital letters to the calm to the positive. But the truth is we don't know for sure and anything we said would be speculation. Closing as opinion based. Mar 15, 2020 at 15:08
  • @DJClayworth Thanks for your comment, but for the following reason I don't think the question should be closed as opinion based: I know that the future development cannot be predicted, what I rather want to know: Since the price for "my" apartment was determined before the corona crisis, is there already information available how the real estate market was affected so far? I.e. I am not asking for something in the future but rather whether real estate prices already dropped due to the crisis. I will change my question accordingly.
    – simplemind
    Mar 15, 2020 at 15:52
  • @DJClayworth I edited my question to adress your concern, I hope it is clearer / less opion-based now. If you still think it's opinion-based could you maybe make a suggestion how I can improve the question to make it a good fit for this site?
    – simplemind
    Mar 15, 2020 at 16:00
  • You are focused very much on the price implications of the crisis. However, with 80% borrowed money you definitely should consider your own income situation as well. How confident are you that you will still have your income in 6 or 12 months? If you lose your job or your company has to shut down, how confident are you in getting another job fast in the same region?
    – Manziel
    Mar 17, 2020 at 14:16
  • I think before any of that you might want to ask yourself why you want to live in a city. If you are in central Europe and have a white collar job then I should imagine for at least the next year it will be home office for most. In general you should play it safe now. Avoid debt. Do invest in land.
    – Frank
    Mar 18, 2020 at 6:40

4 Answers 4


It's unlikely that you would be able to have firm evidence of a sudden drop in price so rapidly. Reason for that is that the real estate market is a bit peculiar: Transactions take time to put together and it can take a long time for prices to adjust. The real estate market is not nearly as liquid as the stock market, international commodity markets or flower auctions.

When there is a real estate crash, it's common for the number of transactions to drop while buyers and sellers figure out the new price. Sellers, especially individuals who have a lot invested in their house, a (possibly underwater) mortgage to pay back, etc. are not ready to lower their asking price at once. Some might prefer to sell their house for the same price several years later rather than selling it at its real price right now. Buyers who are concerned about paying too much (like yourself) wait for the price to feel more reasonable relative to everything else. Those who need to sell a house before buying another one might also be stuck. And nobody knows exactly where the market might clear in between.

But, right now, you would not expect many real estate transactions to be happening in Europe. Real estate agencies are forced to close in several countries, it's not possible to visit houses, etc. So it's difficult to have any idea of what the current prices are, whether the drop in the number of transactions reflects a drop in the underlying market or is just a side-effect of the current measures to fight the pandemic, or how fast everything is going to go back to normal.

  • Stocks dropping are telling you that the economy is hurting and so is demand for assets. Those are big negatives for real estate prices.
  • Usually when stocks drop the financial authorities cut rates which can have the follow-on effect of making long end rates lower, but rates are already very low so we won't get the typical tailwind to real estate prices from lower mortgage rates (lower rates make it easier for people to borrow to buy homes).
  • Real estate prices are typically slow to adjust because transactions aren't happening in the same numbers they do in the stock market. So while they may not go down, they could stagnate for a long time even after the stock market recovers.
  • If markets fall you don't want to be the person buying the asset whose price is sticky and didn't adjust because when markets rebound the thing you bought doesn't appreciate while everything else does.
  • Just because your economic situation is relatively stable/bountiful doesn't mean it's the same for others.
  • Unfortunately, an "extra" ~1% of the global population dying means more real estate to go around, which won't help prices. Falling commodity prices also mean it becomes cheaper to build a home going forward.

Global stock markets just corrected 20%+, real estate prices aren't going to be seeing big price increases anytime soon(unless stocks bounce back, which they very well could, in which case you'd be better off in stocks than real estate) and they very well may fall, but that will take much longer because prices are sticky.

Both the level and volatility of global economic activity are huge question marks right now, and they have a huge impact on the value of assets, including real estate. The global situation with this pandemic is quite volatile. We have still yet to see a country emerge from it. And no, China has not actually gone back to work/ left their homes for anything other than necessities. There is a possibility that once they do we'll see an increase in cases. Will we as a world get through this? Absolutely, we're humans we persevere and are resourceful. That said, we don't know what the world will look like on the other side or how much pain it will take to get there. That could mean much lower prices. Or it might not.

Real estate is notoriously slow to react to changing conditions and sometimes it reacts by just not changing hands for very long periods of time while prices stagnate. This is like prices should go down but they don't because no one sells they just hold on. Real estate prices can be very sticky but that doesn't mean you want to be the one buying when the price should really be lower. You have other things to invest in like Juhist mentioned.

If it were me, to make such a huge commitment at this uncertain time, I certainly wouldn't do it with borrowed money. I want to see a big country like China emerge from this crisis first if i was going to follow through at the same price level while other assets were down considerably.

If I had the money I would want AT LEAST a 10% discount (~half the stock market's drop), and no one is going to give that to you so early in this crisis, and yes, it is a crisis. It will take a few months for sellers to wrap their heads around the fact that their real estate may not be worth as much. Only then may prices adjust as people become willing to sell at lower prices. The most likely scenario though, assuming the equity market doesn't bounce back, is just that prices stagnate for the foreseeable future, so why buy?

UPDATE (3/25/2020): At this point, with global leaders finally having woken to the severity of the crisis, rates coming down as a result and massive stimulus in the works, I'd go ahead and buy assuming

(a) your employment really is stable

(b) you aren't levering yourself too much

(c) you have 1-2 year's worth of expenses saved

(d) you plan to be in the home for at least 7 years and

(e) you reset the rate on your loan lower than where it was previously

I won't be on the board for a while as I have business to attend. Best of luck and really great question!

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    So people want to downvote me but not tell me why I'm incorrect? Okay. If you have an opinion on my opinion, then share it and we can have a discussion. Mar 15, 2020 at 15:13
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    I am a moderator, and not a downvoter. I saw your answer and bookmarked it, to return to edit away some of the caps. The caps create a tone of ranting, even when a rant is not intended. But. I am not a mind reader, and I can't be sure why other vote the way they do. Voters don't always return to the question, and rarely share their reasons. I've let myself get annoyed at a +20 answer having one DV. Thinking "well that answer was great, who would DV?" I'd say i need to get out more, but, well...... Mar 15, 2020 at 17:07
  • Thank you JTP for taking the time to educate me. I'm new to the forum. I've gotten so much out of stack overflow wrt programming that I wanted to give back here where I have my wealth of experience. You're helping me do that in the best way. Anymore feedback is appreciated! Mar 15, 2020 at 17:56
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    I really do appreciate the advice. I will work on my tone and my writing-- I need to get that NorthEast attitude out of my posts! I really do feel obligated to give back here. Stack Overflow is my go-to for python, which for me, is the type of programming language I dreamed about as a teen and adult: an amazing general purpose, batteries included language. Mar 16, 2020 at 17:54
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    I think this answer has some good points but if you could condense it a bit, maybe create some bolded headings for easier perusal, it would probably get more traction. I know I'm pretty long-winded on this site, and when I don't put effort into organizing my answers, they become like tumbleweeds... Mar 18, 2020 at 12:53

NOTE: This post was written in March 2020. Most of its predictions did not come true in most parts of the world.

This post might be really dark and cynical, but these are the facts:

This means that within one or two years, about 2% of the currently occupied real estate might be on the market because the occupants are unfortunately deceased.

And then there are of course all the people who will survive the crisis physically, but not financially. There will be lots of small business owners and self-employed people who used to be well off, but could now go bankrupt because their services are not in demand or not legal to provide during the epidemic*. This might force a couple of them to sell real estate they own. Perhaps some governments will take steps to protect these people from the economic consequences of the pandemic, but those politicial decisions have not been made yet.

The increased supply of real estate might result in a price drop.

Further, some central banks have already reacted to the expected economic downturn caused by the COVID-19 pandemic by reducing interest rates. Others might follow. This usually makes loans cheaper. However the net effect of the zero interest rates on the Euro for European home buyers was pretty much net zero. Yes, loans got cheaper, but real estate prices increased because real estate became one of the few remaining lucrative long-term capital investments.

  • What about their employees, you ask? I am actually not that worried about them, because most of the businesses which get shut down by quarantine employ low-skilled labor. There will be plenty of demand for that during and after the crisis.
  • I'd be interested to know as well whether Working From Home may affect property prices in Cities and Central Business District. This is definitely happening in Australia although it can really only been seen in a boom in property prices in towns outside of the capital cities. The rental market in the Inner City area has taken a hit as well - rents have fallen and a lot of properties are on the rental market for longer but this also needs to factor in Australia's border being closed. The drop in the rental market hasn't translated to the sale market yet ..but I think it will in time
    – LeasMaps
    Dec 2, 2021 at 22:42
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    @LeasMaps Well, where I live (Germany), my prognosis from 18 month ago did not come true. The real estate market was pretty unaffected by the pandemic and kept rising as usual. de.statista.com/statistik/daten/studie/597304/umfrage/…
    – Philipp
    Dec 3, 2021 at 8:17
mostly with borrowed capital (around 80%)

This is too high in my opinion. There has been a period in history in Amsterdam when real house prices fell 80%, leaving only 20% (source). True, it happened over a period of 37 years (1778-1815). Shorter term crashes are usually more limited, easily leaving 50% of the house price value left. If you pay your loan back quickly, you could fund more than 50% of your house with borrowed capital. 60%? Definitely. 70%? Maybe if you pay your loan back very quickly. But I would not fund 80% with borrowed capital.

Is there any possibility of saying whether the crisis will have an impact on the real estate prices?

Anything is possible. In particular, investments (real estate, bonds, stocks) tend to be correlated. We now know that stock yields have increased and equivalently prices have reduced. Whether the same happens to real estate prices is anyone's guess.

Should I continue to buy the apartment as planned?

You should note that alternative investment options have reduced in value and increased in yield. For example, a major hydropower/nuclear power producing company in my area has a dividend yield of 8%. Add to that 2% of inflation, and you have 10% nominal yield. (It only distributes some of the earnings back as dividend, so part of it is reinvested, so the nominal yield could even exceed 10%).

So, do a quick calculation. How much yield would a stock investment have? How much yield would a real estate investment have (in avoided rental costs)? Take into account all estimated maintenance a real estate investment would have in a period of 50-100 years.

I can't say definite yes or no, but in the area where I live, the answer is a clear no. House prices would need to fall by a huge amount to make living in an owner-occupied house profitable, when considering alternative investments (stocks).

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    All this sounds reasonable but does not seem to address the main question: Has anything changed in the last couple of weeks?
    – Relaxed
    Mar 15, 2020 at 16:43
  • @Relaxed That's a good point, but do note I answered the question before the edit.
    – juhist
    Mar 15, 2020 at 17:11
  • ...and oh, I did answer about one thing that has changed: stock prices. If stock prices go down but house prices do not, that's a signal to stop buying houses and start buying stocks.
    – juhist
    Mar 15, 2020 at 17:13
  • It's rather silly to dissuade someone from an 80% mortgage. This is the standard ratio, and mortgages are even offered for as much as 95% of the sale price.
    – Brady Gilg
    Mar 17, 2020 at 22:11
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    Interesting... in the U.S. at least, 20% down is considered quite prudent, and it seems like few people put down more than that.
    – user12515
    Mar 18, 2020 at 0:04

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