Il Real Estate Market shows signs of recovery both in Europe and in the United States. In the face of a generalized growth in prices, however, some critical issues are observed.
After more than three years of negative trend changes, house prices in euro area countries have started to rise again, particularly in Ireland and Germany, where the value of sales in 2014 reached €190 billion, 50% in more than 2009.?
In the United States, the Case Shiller National index recorded a 4,5% y/y increase in January while foreclosures fell by 61% compared to the peak of 2010. The trend of the real estate sector in the country continues to have a strong impact on the labor market: the strong growth in prices in some large cities that concentrate productions with high added value has determined the lack of specialized personnel, who prefer less qualified and paid jobs in regions where, however, real estate prices are lower.?
In Italy, the real estate market is showing mixed signals: Istat average for the year in 2014 prices fell by 4,2% y/y. During the past year, however, the number of residential sales returned to grow, reaching 417 thousand, equal to 3,6% more than in 2013 but 52% less than the peak recorded in 2006. The phase of decline in real estate prices and sales in Italy had a significant impact above all on the construction sector whose added value in the fourth quarter of 2014 was 33% lower than the level at the beginning of 2008.
The systemic implications that the trend of the real estate market has on the global economy are now evident. In the United States, 11 of the past 14 recessions have had their origin in the housing market. According to the International Monetary Fund, two-thirds of the last 50 systemic banking crises experienced worldwide were preceded by a sharp decline in property prices following a phase of excessive growth. On the basis of these considerations, the Fund itself and numerous central banks (including the ECB) have started a systematic monitoring of the conditions of the sector.
Attachments: Focus no. 14-17 April 2015.pdf
