The Research Area of Banca Monte dei Paschi di Siena has drawn up the sixth report “The Italian residential market and mortgages to families”, which summarizes the final results for 2011 relating to the residential property market and the market for bank loans to households. The analysis also includes a focus on the residential property market in Tuscany, Lombardy, Emilia Romagna and Veneto by Ance Toscana.
These are the main points of the research:
– 2011 did not confirm the signs of a weak recovery perceived in 2010. In fact, there was a decrease in the number of sales of residential properties on the domestic market of -2,2% on ap (equivalent to about 14.000 fewer transactions).
-The 2011/2010 variations show for each territorial area a decrease in the number of transactions: the most consistent drop was recorded in the North East (-3,4% on ap).
- The dynamics of prices in the residential sector is substantially static in Italy. Despite the drop in the number of sales, there are no substantial changes in the average price. The numerical growth of the population, the period of still low interest rates, the rationalization of building permits supported the quotation market.
- Internationally, in 2011 house prices continued to fall on the American market, while in Europe it seems that the minimum point has already been reached. In 2012, moderate confidence is expected for the German residential market, caution for the Italian and French markets, while among the emerging markets, Turkey, Russia and Poland are expected to confirm the progress recorded in recent years.
- Investment in new homes is down, both in Italy, where the investment/GDP ratio returns to 2006 levels, and in Europe. Among the European countries monitored, Spain has the Investments/GDP ratio with the most evident drop: 6,9% in 2011 from 13% in 2006.
– A survey with qualified market operators shows that, over the last three years, except for the neutrality judgments expressed in 2010, the trend on the Italian market has always signaled levels of retreat in the region of -10 index points (pi), which collapsed to -47 pi, in the latest survey of April 2012.
– Even in the analysis of the real estate market in 2011 by Ance Toscana, which compares the performance of Lombardy, Veneto, Emilia Romagna and Tuscany, there emerges a clear and generalized decline in 2011 compared to 2010: the Lombardy market is the one showing the greatest dynamism. Tuscany shows the worst results, with a drop in sales of 5,1%, with non-capital municipalities suffering a contraction of 5,7%.
- The stock of mortgages in Italy showed a better trend than in Europe, with a y/y variation of +4,4% and Italy's market share of total mortgage loans resident in the Euro Area remaining substantially unchanged at 9,7% (vs 9,5% in December 2010). In March 2012, the stock of resident mortgages grew by 3,0% on ap in Italy and by 0,8% on ap in the Eurozone.
– From the beginning of the year, however, new business recorded a sharp drop with flows decreasing by -52,0% in March 2012 on ap, significantly worsening the contraction that already occurred in 2011 vs 2010 (-8,8%). The strong contraction of 2011 is also confirmed by the champion Assofin, where "Other Mortgages" (replacements and subrogations) suffered the greatest contraction (-24,9% in terms of flows and -27,9% in terms of number of contracts).
– The variable rate on new mortgage loans to households, after the slight increase recorded in 2010, began to increase again, reaching 3,6% in December 2011, in line with the increase in the Euribor3M rate. The fixed rate, after having recorded a decrease in 2010, increased in 2011, reaching around 5,0% in December. Consequently, the fixed–variable spread decreased in December 2011 to 1,4% compared to 1,8% in December 2010. In the first three months of 2012, there was an increase in the variable rate (which reached 3,9. 5,2%) and the fixed rate (3%) while the 0,8M Euribor drops to XNUMX%.
- The estimate of the observatory on MPS rates forecasts an extremely expansive monetary policy also in the next 2 years. This is confirmed by the further reduction last month of the implicit rates on the 3M Euribor which discount rates below 1% until the end of 2014. Despite this, inflation continues to remain high in many countries due to the adjustment of tariffs and administered prices.
- During 2011, new fixed-rate disbursements began to increase again, but about 50% of disbursements are still stipulated at a variable rate which remains the preferred form by Italians.? The default rate relating to consumer households (whose loans are largely represented by mortgages for the purchase of homes) recorded a stable trend in 2011, at 1,4%. On the other hand, after remaining stable in 2010, the credit quality of the productive sectors deteriorated by 10 basis points in 2011.
