Property prices will continue to fall and will not stop, at least for the two-year period 2013-2014. Furthermore, the market will not recover until the banks begin to open the purse strings and the tax burden does not loosen its grip. It is the prediction of Nomisma in the first report of the year on the real estate market, with a focus on the 13 sample cities of intermediate size (from Trieste to Salerno).
The drop in prices can apparently favor a recovery of the market, but not in this context: "In the absence of a rethinking of credit policies - says the researcher Luca Dondi - there will be no way to bring a significant share of potential demand back to the sector" . Banks will have to do their part or the house will run out of oxygen it needs to live. “The problem – explains Dondi – is that the banks themselves have a lot of properties in their stomachs, the result of mortgages, assets that should be disposed of and which instead remain, like a boulder, on their stomachs. However, it is the institutions which, by not providing credit, do not support the market and therefore cannot get rid of their bad debts. In short, it is a cat chasing its tail and which must be resolved from a regulatory point of view".
The numbers speak for themselves: "in the preliminary balance for 2012, disbursements for the purchase of homes amounted to 25,8 billion euros, with a decrease of 47,4% compared to 2011. Unlike what happened in the first wave of the credit crunch – the result of an international financial crisis and severe constraints on liquidity on the interbank markets – the current drying up of the credit channel (-4,8% in 2013, compared to a record low in 2012 ) is attributable to the higher risks perceived with regard to the prospects of the economic activity and, in particular, of certain sectors such as the real estate one”. Without "exceptional regulatory interventions" the situation seems destined to last because "the inexorable slide towards non-performing of a non-negligible portion of loans, associated with more stringent regulations which require banks to hold additional capital compared to the past in relation to loans real estate, has prompted a rethinking of allocation strategies, which may have structural characteristics”.
Another problem weighs historically on the house: taxes. “A leased property worth one hundred thousand euros produces a taxed income of between 45% and 70% – underlines Dondi – the same amount invested in government bonds has a burden that does not exceed 20%. It is clear that there is no competition”.
On the trade front, the market, according to Nomisma, should hit rock bottom in 2013 (416 trades), to then timidly begin to go back to over 500 sales at the end of 2014. Meanwhile, even in intermediate cities, sales times lengthened further in 2013: +2 months for new homes, + 2,5 months for used homes, + 2,7 months offices, sheds, garage. In the golden decade, '99-2008, prices in intermediate cities had significant increases (+75,1% for new homes) but lower than those in large cities (+93,7%), while the 2008-2013 contraction is similar: -12,8% and -12,5%.
“The projections for the two-year period 2013-2014 – reads the report – outline a further contraction in property prices, in response to the deterioration of the general economic situation and of the real estate market in particular. The worsening of expectations relating to household income, employment levels, disbursements by credit institutions and real estate transactions mean that the deflationary trend is accentuated also for prices. The current year should close in all sectors with a caverage fall close to 5 percentage points, while in 2014 the decline should amount to just under 4%”. In big cities, the drop in prices this year should be by 5,2% for homes; by 5,2% for offices; of 4,9% for shops. Next year the percentage will remain negative, but less markedly: -3,9% for homes; -3,8% offices, -3,9% shops.
Finally, a note of optimism comes from the president of Nomisma Pietro Modiano: “Although mortgages to families are at historic lows, investments for the purchase of homes other than the first home show better resistance. However, the partial shift of wealth from the movable sector to the real estate sector is not able to stem the drastic drop in activity levels”.
