Notary data: Purchases are down 8.7 and loans are down 29.5 in the first half of 2023.

The real estate market is in the red in the first half of 2023. According to the Notary Statistics (DSN), real estate transactions decreased by 8.7% in the first half of the year compared to the same period last year. There was a 29.5% decrease in the number of home purchase mortgages. The notariat also presented an analysis for the 9 largest Italian cities regarding mortgages, replacements and residential building transactions.

Real estate transactions

In the first six months of 2023, housing transactions in Italy decreased by 8.7% (from 303,375 to 277,052) compared to the same period in 2022. The number of transactions gradually decreased over the months and showed a negative trend in the first bi-mester of 2023 (-2.7%), the first quarter of 2023 (-4.8%) and the second quarter of 2023 (-12%). In the first half of 2023, private-to-private primary residential transactions decreased by 11%, while transactions for primary residential properties from the company were -34.2%. On the contrary, the secondary housing market between private individuals remains almost stable compared to the first half of 2022 with a decrease of only 1.9%, while secondary housing transactions from companies decreased by 11.5%.

Home purchase mortgages

Home purchase mortgages fell 29.5% in the first six months of 2023 compared to the same period in 2022. The decline in bank loans was 25.9 percent in the first quarter of 2023, and intensified to 32.6 percent in the second quarter. The trend of a double-digit decline in mortgages issued (-29.5%) compared to a decrease in transactions (-8.7%) continues, emphasizing that rising interest rates have led people to use more equity instead of financing.

The decrease in mortgages issued corresponds to a decrease in capital issued from 38.5 billion to 26.9 billion (-30.1%). The average capital issued in the first six months of 2023 was almost unchanged compared to the first six months of 2022 (€170,597 compared to €172,171 in the first six months of 2022). Analyzing the categories "amount of capital granted", negative data are observed in the range from 200,000 to 250,000 euros (-42%), while the categories from 50,000 to 100,000 euros and over 500,000 euros decreased in value by a little over 20%.

It is also interesting to see the data regarding the age categories to which mortgages were granted. With decreases in all categories, the most significant decrease (-35.9%) is seen in the 66-75 age group.

Predictions for the real estate market in 2023

Based on statistical research from the National Council of Notaries and new 2023 half-yearly data, the market is expected to decline by 10.5%. Analyzing the division into primary and secondary housing purchased by individuals and companies, the decline is general, but there is an important fact: the secondary housing market between individuals remains stable. Specifically, a 13.8% decrease is expected in the purchase of primary housing by individuals and a 32.3% decrease in the purchase of primary housing from companies.

The purchase of secondary housing from companies shows a decrease of 15.3%, but in this case the number of transactions is 2.5 times more (43,798 properties) compared to the purchase of primary housing from companies (18,515 properties). The final and different fact is a slight decrease in transactions for secondary housing from private individuals (-2.5%). The stability of the secondary housing market between private individuals seems in line with the trend in the main Italian cities towards investment in short-term rentals. If this observation is realistic, it would explain the complaints coming from students and beyond about the high cost of renting throughout Italy, especially in the big cities.

With regard to mortgages, financing is expected to decline by 23.8% in 2023, compared to initial forecasts based on data for the first two months of 2023 (-10.1%). The decrease in financing (-23.8%) turns out to be more significant compared to the negative dynamics in the real estate market (-10.5%). This strong decline in mortgages is due to higher interest rates compared to 2022 and therefore a greater use of personal funds instead of financing.

Analyzing the age categories to which financing was provided, it is noted that only those under 36 years of age do not reach double digit declines (0 to 17 years and 18 to 35 years, with declines of 9.1% and 9.6%, respectively). In the remaining age categories, the decrease in funding ranges from -28% to a maximum of -51.9% for the 66-75 age group. The surrogate mortgage market will finally decline 38.2% from 2022, but this figure is heavily influenced by rising interest rates in the second half of 2023 and the low total number of surrogate mortgage deeds, creating a significant divergence in forecasting.

The real estate market in major cities

These cities are Rome, Milan, Naples, Bari, Bologna, Turin, Palermo, Verona and Florence. The data show that despite the decrease in the total volume of real estate transactions (Milan -8.4%; Turin -3.4%; Verona -3.7%; Bologna -4.6%; Florence -10.3%; Rome -9.6%; Naples -7.3%; Palermo -0.3%; Bari -12.4%), in the major cities the trend of secondary housing acquisition is still better than primary housing and in some cases even ends positively (in Turin the acquisition of secondary housing between private individuals increased by 5.3%; in Verona +0.5%; in Bologna +0.9%; in Naples +4.9%; in Palermo +12.2%; in Rome the acquisition of secondary housing from companies remains at the same level as in the first half of 2022, while in Palermo this segment grew by 8.9%). The picture is completed by analyzing the granting of mortgages: -26.4% in Milan; -31.5% in Turin; -25.6% in Verona; -30% in Bologna; -32.6% in Bologna, -29.1% in Rome; -31.4% in Naples; -33.6% in Palermo; -28% in Bari.