The war in Ukraine is likely to play a heavy role on the Real Estate Market. The specter of one inflation double digits and rising interest rates are also looming over the rental housing market and mortgages. Prices have increased, but the sale has slowed significantly not so much on used homes as on new buildings (over time it will affect both segments). Among the problems the increase of commodity prices, those procurement of materials and metals, and consequently delays in construction sites but also the confidence of households and businesses risks becoming negative. Even if the brick remains the quintessential safe haven in the collective imagination, the final balance risks being much worse than the easing of the pandemic emergency let us hope.
Before the outbreak of the war, purchase intentions were high, at their highest levels for 15 years, but the fear is that waiting to finalize the sale will cause a little loss of momentum in the next few years, should the conflict continue. Concern but a pinch of "optimism" from the Real Estate Market Observatory of March 2022 presented by Nomisma, which analyzes the trend of the main Italian cities.
Real estate market: Nomisma revises its 2024 forecasts downwards
The sigh of relief in terms of property sales in Italy lasted a long time. The boom in housing demand in 2021, driven by new post-pandemic needs, slightly mitigates the concerns of sector operators. "The increase in the price of raw materials and the inflationary push are certainties we will come to terms with and which could contribute to slowing down the growth of the economy - he said Fabiana Megliola, head of the Tecnocasa study office -. No major changes are expected on the credit market and rates will remain low. In terms of volumes, a slight decline is expected for 2022: around 730 thousand will be sold (between -3% and -1% compared to 2021), prices should increase between 2% and 4%".
The Nomisma Observatory just presented is more pessimistic, in which the forecasts for the three-year period 2022-2024 have been revised downwards. If before the conflict in Ukraine the forecast of sales at the end of 2022 was 736, now the forecasts are more gloomy with trades that will drop to 694 units (-7,3%) in 2022, to drop again to 651 in 2023. Mortgage disbursements, expected at 68 billion euros, are now reduced to an estimate of 60,4. But in the second half of 2021 there was a timid return on investment, which was also confirmed in these first months of 2022.
The hope, therefore, is that post-pandemic growth can buffer the current situation, making it less serious than it could be.
Banks more cautious in the event of default
At the same time, also "the banking system will implement policies to tighten credit disbursement criteria, following the weakening of households both in terms of employment, due to the repercussions of the crisis on businesses, and in terms of purchasing power, weakened by the rising cost of living,” reads the report. Based on this scenario, the European monetary institutions should "review the interest rate hike choices they were moving towards, in order to meet the needs of households and businesses while maintaining favorable economic conditions for access to credit".
House prices: higher in Milan, Florence and Bari
As for the prices? There are those who have launched a purchase, especially in some large cities where prices have started to rise again. Milano once again the most "lively" reality is confirmed with a 4,6% increase in prices (buying a new house in Milan costs an average of 5.898 euros per square metre, with an increase of 1,1% in six months) , followed by Florence e Bari which achieve a recovery of 3,2%. Against the slope GenoVa, the only major city to return to negative territory (-2,4%).
The peripheral areas once again obtain the best results. Even the hinterland of large cities continues to attract buyers both following the increase in prices underway in the metropolis and for the housing offer present (new construction solutions and independent solutions). The province of Verona (+3,2%) and that of Florence (+3,7%) performed well.
Compared to July 2021 there is a greater interest in studios and two-room apartments, even for investment. The greatest concentration of available spending is found in the lowest range, i.e. up to 120 thousand euros (+24,6%). However, there is a stronger increase in those who want to spend from 170 to 349 thousand euros.
