The impact of the COVID-19 epidemic on residential real estate values in Turkey is investigated in this study. The effect of COVID-19, loan package, macroeconomic, and behavioral control variables on abnormal returns of residential real estate values during the event window is examined in this study. There are three econometric steps in this research. To begin, an event research is used to determine the abnormal returns of residential real estate market. Second, panel data analysis was used to quantify the impact of the COVID-19 pandemic on abnormal returns in residential real estate prices at the regional and city levels. The COVID-19 epidemic, according to city-level studies, has a detrimental influence on atypical returns of property prices, as projected. However, the regional analysis reveals a largely favorable picture.
The COVID-19 epidemic began in China in early January 2020 and quickly spread to Europe and the United States (USA) by February. It swiftly grew into a global pandemic. The COVID-19 pandemic has thrown the global economic system a powerful, external, and negative health shock, affecting both demand and supply. With the consequence of measures adopted by governments to combat the pandemic, such as company closures and curfews, growth rates have plummeted to record lows. In this context2, the second-quarter 2020 declines in the US, the euro area (EA-19), the United Kingdom, Japan, and Turkey were 9 percent, 11.7 percent, 19.8 percent, 9.8 percent, and 10.8 percent, respectively. COVID-19 had a significant impact on China in the first half of 2020.
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What happened, and why did it happen?
In April and May, home sales fell to their lowest levels since the beginning of the housing and financial crisis in 2007 (Figure 1), with many homeowners hesitating to sell in the aftermath of the pandemic. According to Redfin, a national real estate market, the number of homes delisted climbed by nearly 25% from early March to early April last year. 1
In April, new listings fell by more than 40% compared to the same month the previous year. The supply of housing has plunged to new lows due to a lack of new listings and an existing low inventory. According to Redfin, the inventory of houses for sale declined 17 percent in April compared to the same month last year.
Buyers have also slowed down their property purchases. In April, the number of showings per listing in the United States fell by more than 40% compared to the same month previous year. 2 Other housing demand indicators, such as internet search activity, agent queries, and offers made, were all down sharply in April. 3
A significant dip in demand for new house sales is usually accompanied by a drop in prices. However, the coronavirus scare in the spring did not result in significant price drops. Throughout April and May, prices remained stable due to a combination of little supply and record low borrowing rates. Figure 2 demonstrates that, in contrast to the price drops experienced during the 2007-09 crisis, home prices were still up throughout the pandemic compared to the previous year. Get the idea from the Kingdom Valley.
The arrival of the year 2020 has thrown the entire globe into a pandemic, with the certainty of an uncertain future. With hundreds of thousands of deaths and millions of illnesses documented, no country has been spared, from the richest to the poorest. Pre-COVID-19 and post-COVID-19 are defining terms in the same way as pre-WWII and post-WWII are. The global economy had already entered a recession by the second half of 2019, but the situation was predicted to recover in 2020, led by the large emerging nations, with a return to potential world growth by 2021. All bets are off, and all 2020 forecasts are wrong, thanks to Covid-19 and its disastrous impact.
COVID-19 Deadly Effects:
The city-wide lockdown has given people an opportunity to reassess and implement their business strategies. The situation of our country is in a state of disarray. It has left individuals quite unsure about their plans, which is very uncomfortable. The expenses of the tasks are also decreasing; this is an excellent opportunity for those who believe that the costs of long-haul initiatives will decrease. But, in the face of a potentially fatal pandemic, who will consider business and ventures?
The Real Estate Industry’s Consequences
The illness has had varying degrees of impact on various real estate market. The retail and hotel industries have been obviously affected by the immediate hit to request.
Recovery of the Real Estate Industry: Given the recessions of 2008, 2013, and 2018, it is apparent that this virus is yet another major stumbling block. Recovery from previous recessions took several years, and in comparison to the current scenario, we should expect market ups and downs. Because national banks around the world are unable to spring up property expenses due to zero percent interest rates, it will take longer than ever to recover prices and the real estate market.
Some landowners are starting to plan for the future now that the crisis is resolved. The goal of strategic review procedures is to figure out how real estate utilisation will develop in the future. Instead of depending on standard economic or customer-survey-driven methods,
Muhammad Junaid is a CEO of VM Sol, senior Analyst, and Search Engine Expert. Extensive experience being an IT Manager in GreyBricks Marketing – Blue World city. Work for years with local and international enterprises. Also, represent well-known brands in the UAE.