After June, the quantity of the requests has decreased. This was because of the fear of the pandemic. This year will close with less than 500,000.00 sales. The recovery will take place in 2022-2023.
A frost that precedes the winter has melted, in a few weeks, the enthusiasm of the residential real estate demand.
From June onwards, a consistent resistance of the Italian real estate market to the negative solicitations of the pandemic has occurred. However, today, the second wave of Covid damps the purchase of a new home. Nomisma is revealing the change of course of a market that will suffer for several months.
The Osservatorio di Nomisma on the 13 major Italian cities includes so, for the whole residential market, volumes of sale inferior of 20% if compared to 2019 and for about three years. To aggravate the situation, the higher caution of the banks to give mortgages, as well as the complete disappearance of the investment demand undermined by the movement restrictions.
Two are the possible scenarios we have.
The first one, “base” scenario, involves a gradual recovery of the economy in the period
The “hard” prevision, instead, delineates a more complex picture: the recovery will be mild – indeed, the GDP gap will be of more than three percentage points at the end of 2023 if compared to before the pandemic.
So, the medium-difficulty scenario highlighted in March 2020 has become the “base” one.
“During summer, families have deluded themselves that the macro-economic crisis would have had modest effects on their financial statements…”
Luca Dondi Dall’Orologio, the CEO of Nomisma, says:
“This allowed to contain, during the third semester of 2020, the withdraw of the residential sales compared to the levels of last years. And this is not all. The banking sector kept satisfying the families’ financing requests.”
From Nomisma data emerges that, during the first half of 2020, a decrease in the mortgage supply of just 1.7% if compared to the same period of 2019, thanks to the closing of some procedures started before the lockdown.
To the decrease of the house purchase (-15.5%) of the first trimester of the year, a 27.7% contraction during April-June 2020 has followed.
Today, the question is: how will this year close?
In all probability, with 500,000.00 houses sold (-17,1%) according o the “base” scenario, or 491,000.00 (-18,7%) according to the “hard” one. Well below the 612,000.00 sales projected for the current year before the explosion of covid.
In 2021, the situation will not change and the transactions will maintain into the levels of this year given the uncertainties on the vaccines. Generally speaking, the recovery will be slow and will not allow recovering in the shortest time in pre-covid level until 2023 by giving to the market less than 600,000.00 sales.
“The demand is waiting for the cyclical weakening on the prices.”
This is what Elena Molignoni says, the Nomisma real estate business unit and urban strategies responsible.
To be more specific, Milan and Bologna will be the first to underline signs of growth starting from 2022, Florence will follow. However, are now registering a contraction. Until recently, they were having a recovery.
In 2022, Venice, Palermo will recover, while Cagliari in 2023.
The most intense decreases will refer to Turin, Genoa, Rome, with a deflationary trend throughout the three-year period.
On the mortgages front:
“Right when the macro-picture seemed to suggest prudence and from the amount of moratorium requests came clear sufferance signals, especially among recently-activated mortgages, the financial sector kept satisfying the financial requests coming from families.”
Dondi underlines that it is not clear if at the base of this strategy there is the conviction of a progressive return to the normality from September or an underestimate of the impact of employment of the withdrawal. The real estate market took advance of great resource flow proved by the positive evolution of the supply.
Now we are going towards a close.
The social differences scissor widens: there will be people who will have the possibility of change and purchase a home, while others who will not have the possibility to obtain a mortgage.
In the meantime, the prices of the properties in the 13 largest Italian markets are projected to decrease.
With more contained variations (-1%) for the new properties in three of the four market segments considered (luxus, centre, semi-centre and suburbs), while for the properties used in predtigious areas and in the centre. Limited to the secondhand, the expectations seem worst in the semi-centre and suburbs (i.e.: -,515 and -2,93%).
In 2021, in the hypothesis of the “base” scenario, prices will remain stable in Milan only.
The decreases will be 2,8% in Rome and Genoa, 2,3% in Turin, and 2% in Bari, Catania, and Naples.
In 2022 and 2023, the quotations will increase in Milan.
In the most problematic scenario, the values decrease will be 3,4% in Rome and Genoa in 2021, the year when the values will decrease in Milan too, but just of 0,4%. They will then recover within the two following years.
In Milan, the average sale timing is more contained. For a new home, it takes about four months to reach the sale, for a secondhand home about 3,9 months. Those values increase to a maximum of 7,5 months in Genoa for the new segment.