Global real estate market to contract by 12.5 in 2023, rents are rising.

Мировой рынок недвижимости сократится на 12,5 в 2023 году, арендные ставки растут.

The Osservatorio Nomisma study confirms the freezing of the Italian market: mortgages issued fell over the year (-29%), leading to a reduction in real estate purchases/sales (-12.5%). Banks have found it harder to lend and real estate prices have gotten higher. That's why 7.3% of demand is shifting to rentals.

Milan is the most expensive city (prices up 1.3%), Bologna is the leader in rental costs (up 5%). There are fewer and fewer real estate transactions, the slowdown in the real estate market intensified in the second half of the year; here's why more than 7% of demand is shifting to rentals.

The third Nomisma real estate market survey confirms the official freeze announced by ISTAT and adds a few highlights. The slowdown started in the last months of 2022, then intensified during 2023 after the ECB's first rate hike a year ago to curb inflation, and threatens to continue into 2024.

Read an excerpt from the report (which analyzes real estate results in 13 major Staples cities): "The sudden lack of oxygen in the Italian real estate market is due to the lack of income indexation (i.e., prices are rising for all goods, while wages remain in place) and the increased difficulty in accessing credit (tighter conditions offered by banks to grant loans) caused by the rising cost of money" (interpretation: until the summer of 2022, when the ECB started raising rates, the situation was favorable). Demand for housing has shifted to rentals.

The numerical decline in mortgage originations is 29% this year compared to last, with two consequences.

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First, a decline in transactions: -12.5% compared to 2022. While growth slowed in 2022 (+4.7% to 2021), the drop in the first half of 2023 (compared to the first half of 2022) was almost 13%, which means 50,000 fewer transactions. Second, the difficulties Italian families face in buying a home have increased interest in renting. Over the last year - notes Nomisma - 7.3% of housing demand has shifted from buying to renting, increasing the pressure on an already overloaded market and thus contributing to price increases: rents have risen by +2.1%, with the largest increases in Milan, Florence and Turin (between 3% and 4%), while Bologna stands out with an increase of +5%.

Prices from Milan to Cagliari More stable (as is their nature) buying and selling prices: looking at the 13 territories considered (Bari, Bologna, Cagliari, Catania, Florence, Genoa, Milan, Naples, Padua, Palermo, Rome, Turin and Venice), house prices fluctuate on average from minus 1.3% in Cagliari to plus 1.3% in Milan, which confirms its status as the city with the largest price increases in 2023.