The Italian real estate market continues to blow “a wind of surprising optimism”

A wind of surprising optimism continues to blow on the Italian real estate market. 3.3 million families intend to buy a property. This is what we read in the Overview of the second Observatory on the Real Estate Market – July 2021 of Nomisma. Analyzing real estate sales in the first quarter of 2021 (compared to the same period of 2020), there was + 38.6% for homes and + 51.3% for the tertiary and commercial segments. Well + 61.6% for deposits and garages and + 43.6% for the production sector.

According to the Bolognese Institute, after the second pandemic wave many families have expressed the need for an upgrading of their housing conditions. Today therefore “the fiduciary result of an expression of interest as widespread as in some cases unaware of the actual sustainability” predominates. Nomisma, in fact, highlights how we cannot underestimate the extent of the economic and social unease that the recession induced by Covid-19 will leave behind and “only partially already tangible”.

This is why, according to the Bolognese think tank, “the new phase could expose families so far only marginally interested and transform some wishes into unrealistic expressions of interest”. The signal comes from the analysis of a fact: considering the immediate purchase intentions, or in the next 12 months, they concern 3.3 million families. However, if the degree of concreteness and sustainability of the declarations of intent is assessed, the actual pool of potential buyers is reduced to just over 800 thousand units.

This is the number that makes Nomisma point out that all of this “in many cases presents assumptions of solidity that are so unstable as to jeopardize their credibility”.

Even in the face of credit risk indicators that present a widely reassuring picture, Nomisma expects a scenario of progressive deterioration, with the systemic implications that this entails, similarly to what happened in the past too recent to be forgotten ».

For the Bolognese Institute we are facing a real estate market that “continues to return an unsuspected image of exuberance”. For 2021 Nomisma expects that the number of transactions will return to align itself with the forecasts formulated before the pandemic arose, with a cumulative decline in the two-year period 2020-2021, compared to the pre-Covid scenario, which will not exceed 4%. Moving on to prices, the expected rise will make it possible to contain total losses, compared to the expected evolution, in the order of 1 percentage point.

Nomisma invites you to wait for the macroeconomic developments in the coming months to have proof of the sustainability of the effervescence which now draws strength mainly from expectations. There is in fact “need for the robustness of real dynamics to ensure that the current dynamism does not turn into a bubble destined to burst”.

On the housing front, optimism – for Nomisma – favored an immediate rebound of all market indicators; the situation on the side of the properties of small economic operators appears to be more controversial.

Equally uncertain is the evolution of the corporate sector. The pandemic has forced a more marked downsizing with a drop in investments – in 2020 – close to 30% and a first half of 2021 still rather weak.

In this period there has also been a shift in investor preferences; in fact, the share of loans in sectors that were once residual (primarily logistics and residential) has grown considerably compared to the office and commercial sectors. This displacement – for Nomisma – “risks fueling the illiquidity of certain types”.

To consolidate the resilience that the Italian real estate market – both residential and business – has shown during the pandemic waves “it will be necessary that the optimism of macroeconomic expectations be followed by the concreteness of real dynamics”. while waiting for this to happen, according to Nomisma, it is good not to abandon “attention and caution”.

Secondary markets – confirming a trend already recorded last year – in the first quarter of the current year played their unusual driving role in the recovery phase.

The tertiary and commercial sectors in the first quarter of the year also recorded a recovery of lost market shares. However, there were some divergences between the markets: in the office segment there were significant drops in Naples (-46.6% yoy), Genoa (-43.1%) and Bologna (-23.6%); in that of shops, the only market in contrast to the trend was that of Bologna.

In Italy, the residential sales market basically continues to be managed by individuals, both as buyers and as sellers. As much as 95% -96% of home purchases are made by individuals. The selling counterparty is private in 87% of the transactions, while the remaining part (13%) is made up of a company.

In the first half of the year, 54.2% of the sales made by individuals were financed by taking out a mortgage.

Moving on to consider the concessions for the purchase of a first home, in the first quarter of 2021 they concerned 75% of transactions. Specifically, 58% is represented by purchases by those who do not yet own a home, while for the remaining 17% it is a replacement of the existing one.

Through a further analysis of first home purchases, it emerges that 43% of the home sales market in Italy is concentrated in the price range up to 1,180 Euro / sqm.

The average take-up times for properties for sale are approximately 5.7 months for homes, 9.3 months for offices and 6.6 months for shops. Milan is the market with the lowest absorption times in all three monitored segments.

The discount on the average asking price of the 13 major markets in the first six months of the year was 12.9% for homes, 15.4% for offices and 15.8% for shops. The lowest values ​​are reached in Milan, while the highest in Palermo.

Market operators confirm, for the first 6 months of the current year, the prevalence of the demand component addressed to the property (62%) compared to rent (38%).

In any case, there are regional differences: rental demand fluctuates between 42-45% in the markets of Naples, Turin and Bologna, while it drops to 28-31% in Milan, Padua and Cagliari.

In 2020, the number of new leases and renewals was just over 1.5 million, an increase of 12% compared to 2019. Most (equal to 1.3 million) of these contracts concerned units housing, with a decrease of 8.8% compared to the previous year.

69.5% of the rental contracts for residential use relate to the market rent and transitory rents segment, while the remaining portion (30.5%) falls within the subsidized segments (agreed rent and for students).

In municipalities with high housing tension, where more than 50% of the Italian population is concentrated, the share of ordinary and transitory lease contracts drops to 56%, while the subsidized component rises (44%).

In Genoa, 62% of leases are at an agreed rent, compared to just 4% in Milan. For Nomisma there are several factors underlying this non-homogeneity: trend in the values ​​of the local rental market, gap between market rents and agreed rents, delay in updating local agreements, reduction of the Imu and Tasi rates applied by the single Municipality and, more generally, local policies in favor of leasing at an agreed rate.

The Bolognese Institute notes the important correlation between the diffusion of the agreed fee segment and the gap in the fee levels in the 8 main Italian markets: as the share of the subsidized market increases, the distance between the fees decreases. It is on this distance that it is necessary to intervene in the Territorial Agreement to favor the spread of the agreed fee, while avoiding creating market distortions.

On average, the gross rental yield is 5.2% per annum, with significant differences between the various territorial contexts. The fluctuations with respect to the average data range from -110 basis points in Venice Lagoon to +68 basis points in Rome.

For Nomisma, in light of the low levels reached by certain markets (first of all Rome and Naples), on the rental yield front we can see margins of recovery compared to the potential. On the contrary, in mainland Venice and Turin, the liveliness of the rental market has already made it possible to return to the maximum levels of profitability compared to the historical average.

Source: RSS Economia by

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