According to the latest HousingAnywhere International Rent Index Report for Q2 2020, quarterly rental rates in practically all European cities fell in Q2. While early hints of the Covid-19 pandemic's impact on rental rates were seen in the first quarter of 2020, the implications of the travel ban, which was in effect from mid-March, are now completely apparent. ارض
Single-room rents have reduced the most year over year, while prices for apartments and studios have been less affected. This is due to stronger local markets: while demand for these houses has declined dramatically among expats and young international professionals, it continues to be high among local residents of larger European cities. Because there is less demand for single rooms from outside markets, more are left empty. Cities in nations that were less affected by Covid-19 and were able to reopen their borders in mid-June have seen lesser declines in rental costs as a result.
Despite the fact that the impact on rental costs is obvious, the consequences vary by city. London remains the most expensive city to rent in Europe, but the city's rental price increase has slowed even further in recent years. Rental costs in Milan, Barcelona, and Berlin are now lower than they were in Q2 2019.
The most noticeable changes are that Italian cities have declined, whereas Helsinki and Reykjavik have remained stable.
The rent prices in Italian cities have dropped the most out of all the cities in the Rent Index. Milan, the city of Lombardy and the region severely hit by the virus, witnessed the largest drop in rent of any of the cities on the Rent Index. One-bedroom flats fell -7.8% to EUR1,096 per month in the second quarter of 2019, a decline of -4.6% from the previous quarter. Turin, 140 kilometers from Milan, has had a quarterly drop of -7.8% in one-bedroom flats to EUR 812 a month, a drop of -5.9% from the previous year. Rental costs for one-bedroom flats in Florence fell by -6.9% to EUR 918, a decline of -4.6% from the previous year.
In comparison to the previous quarter, rental costs in Helsinki have decreased by 0.1 percent for single rooms, 0.07% for studios, and 0.02% for one-bedroom flats. In Reykjavik, we notice a similar trend: single rooms are down 0,06 percent, studios are down 0,07 percent, and one-bedroom flats are down 0,02 percent from Q1. Both cities have seen positive rises in residential rental prices year over year. The cost of renting a one-bedroom flat in Helsinki grew by 14% in 2019 to EUR 1,399. In Reykjavik, the cost of a one-bedroom apartment climbed by 3,6% year over year to EUR 1,081 a month on average. In mid-April, the number of Covid-19 cases peaked in Helsinki. Finland, with the exception of Sweden, has reopened its borders to the Baltic countries and the rest of the Nordic countries as of June 15. Mid-April was also Reykjavik's peak, and they reopened their gates on June 15.
Germany is taking action, and Spain has a bright future.
With a 5% decrease, rental costs for rooms, studios, and flats are all falling in Berlin. The travel ban had a significant impact on the city, which is a popular tourist destination for overseas visitors. At the same time, rents have been falling since the Mietendeckel (rent cap) went into effect in February. The German government has decreased VAT for six months, from July 1 to December 31st, in an effort to bolster the economy following the coronavirus pandemic shutdown. VAT rates in Germany will be reduced from 19 percent to 16 percent (normal VAT rate) and from 7% to 5%. (the rate applied to food, medical supplies, public transport, et cetera).
The average monthly rent in Madrid has declined by -2.3 percent to EUR1123. With the country's reopening to international travel, June rents have begun to recover to January levels. Longer-term prospects for Spanish cities are very promising. The impact of Covid-19 on the real estate market, according to Spanish economists examining the issue, will be most obvious in Q3 of this year. They do foresee a quick rebound, though, because there is a significant demand for housing and the country is in much better financial shape than it was in 2008.
You'll get more bang for your cash.
As a result of people needing to (partially) work and study from home, there is a stronger demand for higher-quality housing, outdoor space, and green spaces. Apartments and studios with plenty of space, including gardens and balconies, are in high demand. Tenants are also switching apartments more frequently in pursuit of a better deal. Accommodations with a separate study or work room, or those that can provide these services close to the lodging, are likewise in high demand.
More and more landlords are switching from short-term rentals to long-term leases, continuing a trend that began in Q1 of 2020. Landlords diversifying their portfolios is also an ongoing trend that began in Q1.
Djordy Seelmann, CEO of HousingAnywhere, describes the current situation as a tenants' market, in which supply outnumbers demand. "Demand recovery will be determined by when and to what extent international mobility returns. The worldwide rental market is still tumultuous, with a second wave on the horizon. While the number of overseas students is projected to decline in the following academic year, educational institutions anticipate that programs will return to normal by January 2021."
Despite the fact that the rental market is turning in favor of tenants, there is still a housing shortage in many major university cities. With universities announcing a blended strategy for September and European universities expecting a large number of enrolments in January 2021, it's unclear how long rental prices will stay at this level or perhaps begin to rise again.