After the previous article, taking into account all the analysed data, we try now to hypothesise when a real recovery of the second homes market could be expected.
Considering the analysis we conducted on the second homes market, we should expect a recovery of real estate values in concomitance with the growth of demand and the reduction of supply.
- As for the previous article, let’s start with the analysis of the demand:When will there be more demand?
We can’t hypothesise an increasing of international buyers for many reasons: first, it’s already happened; moreover, there are several unfavourable international matters which are limiting the increasing of foreign investments in Italy (Brexit, terrorism, slow growth of the global economy, rise of the value of the Euro against other currencies, etc). So, assuming that the international market will remain the same, we should expect and hope an increase of Italian buyers.
When and why do people buy a second home?
- First of all, they can afford something “superfluous” when they have enough financial resources. In this regard, we can all agree that Italian families are currently not in this “mood” and a recovery of the Italian economy would be necessary to get back to that situation. Even assuming a structured upturn of the economy starting from 2018, financial resources combined with a psychological stability of the market can be expected not earlier than 4-5 years from now. Anyway, it is not possible to make predictions on the Italian economy or on the global one. It is therefore plausible to think that second home purchases by Italian buyers will not increase in the short term.
- In the past, when people bought a second home, their intention was to spend their holidays in the same place every year, at relatively low costs. Nowadays, the global trend regarding this matter has evolved: firstly, management costs of second homes have become disadvantageous compared to the time spent there; until a few years ago though, it might have been possible to think of increasing the capital in short time by investing in real estate. Clearly there is no need for further explanations. Moreover, in the last 10-20 years, the holiday philosophy has radically changed, and now people want to visit a different holiday spot every year.Considering all this, we can affirm that the Italian buyers’ demand for second homes will not increase in the short-medium period, while the international clients’ demand, at best, will only slightly edge up.
- Let’s analyse the supply:In order to raise the real estate values, the number of properties currently for sale should decrease. What is happening, though, is quite the opposite: in fact, the same reasons which prevent the Italian buyers from purchasing a holiday home, also push them to sell their own second houses.
In particular, here are the main reasons:
1. Lack of free time to enjoy those homes with the family;
2. New generations want to spend their holidays around the world, not in the same spot every year;
3. High management costs; it is cheaper to rent a property for two/three weeks rather than maintaining yours, often less prestigious than the rented one;
4. Last but not least, if you own a second home, the Public Administration will see you as a wealth person and will charge you with a higher taxation.
In conclusion, do we think that real estate values for second homes will increase in the short-medium term? Absolutely not. On the contrary, we can expect even a further reduction of the mentioned values.
Despite this analysis, there still are people who decide to invest in Italy for their second homes.
Given their reduced number, it is possible to draw a precise delineation of the typical buyer. In the next article we will talk about it.