The picture on the Italian real estate market is becoming even weaker. Yesterday Istat certified the slowdown in prices during 2023, a few days earlier it was the Revenue Agency that summed up sales by speaking of a 10% drop, with a high mortgage effect that paralyzed availability family finances.
Today it is the economic analysis company Nomisma that returns to the point, with the first Observatory on the real estate market in which we read that “while waiting for the economic outlook to become clearer, the Italian real estate market is returning signs of further weakening. The progressive increase in interest rates, combined with the newfound selectivity of the banking class, they abruptly interrupted a mechanism that seemed destined to constantly increase even the most fragile aspirations“.
Nomisma: two million families at risk of insolvency. Anyone who loses their house at auction still remains super-indebted
by Rosaria Amato
The problem is now clear: without credit, houses cannot be bought. For observers, the availability of financing has an “indispensability which is now clear, especially in a phase of cyclical weakness2. The market, fresh from the years of zero rates and the ample availability of money due to the incessant action of the Central Bank, found itself taken aback by the sudden change of direction. “The high cost of money has meant that the share of mortgage-assisted sales has reduced from 48.4% in 2022 to 39.9% of the total purchases in 2023 – further notes Nomisma – Difficulties in accessing the market of buying and selling have favored a potential shift in interest in demand towards renting, which has grown by 3 percentage points compared to last year. In other words, in 2023, 48 thousand families gave up buying a house in favor of renting”.
The problem is that, faced with a lower availability of money, prices react very slowly. In short, they don’t go down and this “inevitably ends up widening the gap between supply expectations and demand availability, contributing to further slowing down transaction activity. In 2023, sales suffered a decline of close to 10% with almost 710 thousand total homes changing hands on the market.” According to Nomisma, “the decline in sales recorded in 2023 is attributable exclusively to the demand component that left the market because it was dependent on credit (-26%), while purchases without a mortgage continue to grow (+4.8%)”. Translated: those who have the money continue to buy, those who have to go to the bank postpone the dream of purchasing.
It must also be said that each city has its own story. For example, if the markets of Messina and Ancona show a nominal decline in prices (-2.2% and -1% respectively), those of Trieste and Novara (+3.2% and +3% respectively) show a variation double the positive trend compared to the market average. Now some signs of a reversal of trend have been seen: as we know, the ECB will most likely cut rates in June and in recent months fixed mortgages have already taken note of this new scenario, with a drop in costs. But for Nomisma, a more accommodating attitude on the part of the ECB will not be enough to determine an immediate increase in transactions, but a normalization phase will be necessary to facilitate the restoration of conditions more favorable to demand.
Per Luca Dondi, CEO of Nomisma, “There are quite a few unknowns that punctuate the trajectory of the Italian real estate market in 2024, even if the main one remains linked to the orientation of financial institutions at every level. If in the first half of the year the picture does not seem destined to change, from the second it is reasonable to expect a change of course, with effects that at least initially will be rather timid”.
Rental growth
On the rental front, the growth in rents does not stop (+2.9% per year). The average summarizes a certain variability between cities: from the decline in Messina (-1.3%), to the stability in Bergamo (+5.1%) up to the peak in Perugia (+5.2%). “The shift in interest towards rental will further highlight the overcrowding of a sector which already suffers from a clear lack of supply. In the residential sector, the better performance of the rental segment compared to the purchase segment supported the growth – albeit slight – of gross rental returns which stood at 5.6% per year”, we read further in the Observatory.
From which emerges, finally, how the demand – both for purchase and rental – “is increasingly oriented towards favoring internal amenities such as the balcony or terrace, the double bathroom, the brightness of the rooms and the availability of the parking space or of the garage, as well as connectivity services. Subsequently, the research favors the characteristics of the context, such as the presence of greenery and proximity to public services and transport and, finally, the type of building, which is evaluated in terms of condition of use and energy performance”.
“Real estate operators expect, for 2024, a further decrease in the quantities traded on the market (47.5% of opinions) or, at most, an invariance on last year’s levels (44.3%). Only 8.2% of those interviewed expect a recovery in sales as a result of greater accessibility to credit, the availability of new homes for sale and an increased propensity to purchase, also supported by the onerousness of rents” , he concludes Elena Molignoni, Head of Real Estate Nomisma.
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– 2024-05-05 08:22:18
