What's happening in the Italian real estate market? Latest market data.

Inflation continues to gnaw at the incomes of Italian families, the cost of money is skyrocketing and economic growth is beginning to show signs of weakness. In such an alarming macroeconomic environment, what is happening in the Italian real estate market?

Useful information for understanding the state of this industry has been released by the Tax Increment Agency, and unfortunately it is disappointing. In the second quarter of 2023, purchases and sales were down significantly from the same period in 2022. The national decline in the residential sector was 16%. In some major cities, the decline was even greater: Rome -21.5%, Milan -17.1%, Bologna -22.8%.

The market has clearly been affected by the sharp rate hike implemented by the European Central Bank to combat inflation. This increase is adversely affecting the provision of mortgage loans, the volume of which fell by 26% in the first quarter of 2023 compared to the same period in 2022. European Central Bank President Christine Lagarde is known to imply that interest rates will remain high for a long time. Of course, until inflation normalizes, provided, however, that there is no serious recession that would force Frankfurt to pull back sharply. Both scenarios are negative for the real estate market.

Experts have concluded that the mini growth cycle that started in 2021 after the restrictions were lifted has come to an end.

The future prospects for this industry are uncertain, but not disastrous. According to analysts from Gabetti's research office, demand for real estate is still strong. This means that if the long-awaited reduction in rates is announced, the industry will be ready to resume. The rental housing situation, on the other hand, is getting better. In August 2023 for residential rentals, the average price was 12.77 euros per month per square meter, which means an increase of 5.10% compared to the previous year. In this case, unlike sale prices, there is no recent change in trend. Source: Immobiliare.it, Michael Pontrelli, 27-09-2023 - 12:04.