How coronavirus has affected real estate buying behaviour

Insight
corona influence is significant to real estate industry

Coronavirus has had a significant impact on the real estate industry in Japan. After the government declared a State of Emergency, many real estate companies also recommend their employees to work from home, so our activities have become somewhat limited under this situation. 

Recently potential clients have been inquiring whether there are any good bargains, i.e. if any properties that are on the market at a reduced price. 

Anyone who is interested in real estate would like to know about this issue. To help understand the current situation, we have found an interesting survey that uncovers buyers’ sentiment and the behaviour of those that had been considering to buy. 

Survey Outline

Even in Japan, the impact of coronavirus on the real estate industry is becoming increasingly significant. Lifull Corporation, a leading homebuilder in Japan, surveyed consumers that were considering relocation or rebuilding a home. The results provide an interesting insight into the consumer sentiment of real estate buyers. 

Summary of insights

  1. More people considering, less action taken
  2. Majority are putting plans on hold
  3. Anxiety about future income levels
  4. Some consumers are reducing visits to real estate companies
  5. Desire for online services grows

1. More people considering, less action taken

The number of consumers who are considering relocation/rebuilding has increased slightly. However, there is a reluctance to move forward or take any action. It appears that this behaviour change grew in April due to the influence of coronavirus. The number of people considering to relocate slightly increased, whereas the number considering to purchase declined.  

Question 1a: Are you considering relocating or rebuilding as of March 1, 2020 (before the impact of the coronavirus pandemic)? Are you currently considering relocation or rebuilding? 

Q1b: At what stage in the process are you / were you?  

Q1c: What kind of property did you consider / are you considering?  

2. Majority are putting plans on hold

Approximately 70% of those that were considering relocating or building, are pausing their plans. About 7% will not continue their plans regardless of the deadline, and a smaller group will cancel even if the deadline for contract exchange is delayed. 

Q2: For those considering relocation/rebuilding, is there a deadline you are working with?  What is your current outlook?  

3. Anxiety about future income levels

More than 80% of the reasons given for postponing or cancelling relocation/rebuilding plans were triggered by the Coronavirus pandemic. The most common response was “anxiety about future income”.

Q3:  What is your current outlook?  

4. Some consumers are reducing visits to real estate companies

20.4% of consumers refrained from visiting real estate companies due to the impact of the coronavirus pandemic.

Q4: What have you done differently as a result of the coronavirus pandemic?

5. Desire for online services grows

40% of those who postponed relocation/rebuilding plans and 30% of those who canceled plans are expecting online support. The types of online consultation mentioned include using video call and/or real-time online viewing, i.e. being given a virtual property by real estate agents at the property.  

Q5: If you have a real estate company that handles everything online, do you think you would continue to search for a new home?

Survey details

Source & analysis by Lifull Corporation  
Survey period: April 17 – April 21
Respondents age: 17 – 49   
Number of responses: 70,000 
https://business.homes.jp/special/20200501/ 

Key takeaways

As the results of the survey show, prospective purchasers are watching the situation now. 
In addition, inbound customers who prior to the pandemic, had an impact on the market, will also not be able to come to Japan, so the stagnation of the market will continue for some time. 

However, you may have a chance to negotiate on price more than before since there are some sellers who want to sell their properties early. One of my colleagues has explored this further in Heightened Negotiation Power For Buyers Amid Coronavirus. 

At the moment, the banks do not seem to be tightening loans, so real estate companies who undertake renovations and rebuilding projects are actively looking for a property to buy. 

The situation is changing from moment to moment and there are no similar precedents. It is also difficult to clearly see the full effects and it is necessary to pay close attention to what the impact of this so-called “corona shock” is on the Japanese economy. 

If you keep an eye on the trends and conclude that overall, now is the time to invest, real estate can still be a good option.  

Currently, Housing Japan provides the same services as before to our customers, whilst working from home. Also, we are offering services such as online viewings for the customers who cannot come over to Japan!  

Finally, stay safe and healthy! We hope that normal daily life will return as soon as possible.  

Author: Sumie Shu

Sumie Shu is originally from Chiba prefecture and spent five years living abroad in Shanghai and Taipei. She has worked in real estate since 2011, experiencing the effects of the Great East Japan Earthquake on the market. She is both a licensed real estate agent and a certified residential loan consultant. Before joining Housing Japan, she worked in the airline industry, import/export, and as a leasing agent for a shared-accommodation broker.  

As well as being a fluent speaker of Japanese, English and Chinese, Shu is passionate about Tokyo real estate and has her portfolio of investment properties which enables her to advise clients from her personal experience.