Real estate in Italy: latest market data

Inflation continues to pinch the incomes of Italian families, the cost of money has risen sharply and economic growth has begun to show signs of weakness. In such a preoccupied macroeconomic situation, what is happening in the Italian real estate market?

The fall in real estate transactions

A useful piece of information for understanding the state of this sector has been published by the Revenue Agency, and unfortunately it is disappointing. Real estate transactions are down significantly in the second quarter of 2023 compared to the same period in 2022. The national decline in the residential sector was 16%. However, in some major cities, the decline was even greater: Rome -21.5%, Milan -17.1%, Bologna -22.8%.

The impact of rising interest rates' 'on mortgages

This sector is naturally affected by the sharp rate hike implemented by the European Central Bank to fight inflation. This increase is negatively affecting the issuance of mortgages, the volume of which fell by 26% in the first quarter of 2023 compared to the same period in 2022. As you know, European Central Bank President Christine Lagarde has made it clear that interest rates will remain high for a long time. Right up until inflation returns to normal levels, provided there is not a severe recession that forces Frankfurt to pull back urgently.

The trend in residential prices' 'real estate

Experts have concluded that the mini-growth that began in 2021 with the end of the Covid lockdown has already come to an end. This is confirmed by the price trend. In August 2023, residential property prices averaged €1,971 per square meter, compared to €1,978 in July and €1,980 in June. Compared to 2022, prices are still rising (+2.28%), but there has been a slight change in trend in recent months.

Sector outlook

The future prospects for the sector are uncertain but not dramatic. According to Gabetti's research office, demand for real estate remains strong. This means that if the long-awaited interest rate cuts kick in, the sector is poised for a recovery. However, the rental real estate situation is going' 'fine. In August 2023, the average rental price for residential properties was 12.77 euros per month per square meter, an increase of 5.10% compared to the previous year. In this case, unlike sale prices, there is no recent change in trend.

27 September 2023.