Corona makes home ownership less affordable

In Portugal’s capital, Lisbon, rents are almost unaffordable.
Image: dpa

Even if real estate prices fall in Europe during the Corona crisis, they will be less affordable on balance, according to the rating agency Moody’s. This affects young people and the poor in particular.

mho. Frankfurt. According to an analysis by the rating agency Moody’s Investors Service, the corona pandemic has worsened the housing situation of Europeans. Homeownership is becoming even less affordable, especially for young people and low-income groups. Although house prices are falling, so are household incomes, and the availability of real estate loans is deteriorating. The population groups most affected are preferably active in industries that are particularly affected by the pandemic, such as trade, gastronomy and tourism. Therefore, the probability of job loss is greater here.

The opportunities to buy a home had deteriorated in Europe even before the pandemic because capital requirements had increased significantly. Since 2016, for example, in Amsterdam, the cost of a 70 square meter apartment has risen from almost 15 times the average disposable income to more than 20 times, in Paris from around 19 times to 23 times, in Frankfurt from around that 13- around 16 times. This will increase the need for social housing and increase rent regulations.

In addition, the demand for housing is likely to shift from inner-city locations to the suburbs, as corona-related teleworking will be maintained. Rent expenses as a proportion of average income have also grown in many places. But while this ratio is little more than 20 percent in Berlin, it is more than 70 percent in Dublin and even more than 90 percent in Lisbon.

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