Rising inflation is boosting Italian real estate.

In 2023, despite the general decline in housing transactions, there is an increase in the number of real estate purchases for investment to generate rental income. This shows that real estate continues to be the most sought-after and reliable investment to protect the savings of Italian families who have been hit hard by inflation.

Such data is presented by the national real estate watchdog OIN Fiaip, which was first conducted last year and expanded this year with the participation of two other organizations, ENEA and I-Com (Institute for Competitiveness).

In addition, a report was presented on the real estate market inMilan, which is confirmed as Italy's most lively and attractive real estate city even in 2023. The report, presented inMilan at the offices of Banco BPM, shows that in 2023 the total number of housing transactions decreases to around 700,000 (-10% compared to 2022).

The number of transactions with primary housing decreased, while the number of transactions with secondary housing increased (+ 1.5%). Along with the increase in sales of one-bedroom apartments (5-fold increase compared to 2022) and two-bedroom apartments (+ 64%), there was a significant increase in the number of purchases for investment to generate rental income (+ 28%). The average increase in market prices was 2% (2023 vs. 2022).

The highest growth is observed in large cities where demand significantly exceeds supply, with a peak of 6% in the city ofMilan. The real estate market situation for commercial distortion (stores + 0.2%, offices - 0.2%, warehouses + 0.1%) and prices (stores -0.1%, offices -0.2%, warehouses + 0.3%) remain at roughly the same level as in 2021 and 2022.

With a focus on energy efficiency, it was found that in 2023 there is a significant decrease in the proportion of apartments sold in Class G, especially two-bedroom apartments (9% in 2023 vs. 27% in 2022) and row houses (20% vs. 24% in the previous year). In general, for all types of construction projects (new, remodeled and in need of remodeling), there has been a significant increase in the share of apartments sold in Class D.

62% of buyers (vs. 54% in 2022) recognize the importance of a property's energy efficiency, suggesting that energy performance is increasingly factored into purchasing decisions, likely due to higher energy prices and inflation, especially in the first half of last year, and 62% of respondents (vs. 58% last year) believe that an energy performance certificate helps decide on a more energy-efficient home.

Finally, for 52% of real estate agents, the 110% superbonus tool has had a significant impact on real estate market dynamics, significantly increasing the number who consider it very meaningful (35% in 2023 vs. 20% in 2022).

Fiaip real estate agents have high hopes for 2024 due to the expected decrease in mortgage interest rates and inflation. The buying situation is expected to be the same as in 2023, with a further increase in investment and a significant stabilization of property prices (+3% in the big cities only). For residential rentals, an increase in the number of contracts (+3%) and an average increase in rates (+5%) is expected, while for commercial real estate (stores, offices and warehouses) a slight increase in transaction volume of 1% and a 2% decrease in prices and rates are expected.

The report was presented by Francesco La Commare, President of the Fiaip Research Center, together with Francesca Hugoni from the ENEA Energy Efficiency Department and Franco D'Amore, Vice President of I-Com. The final analysis and comments were presented by Giorgio Spaziani Testa, Chairman of the Confedilia and Gian Battista Baccarini, National President of Fiaip, while the focus on the real estate market ofMilan and the province was presented by Sara Frizza, Head of OIN Fiaip Milan. After welcoming remarks by Matteo Faissola, Head of Banco BPM Commercial Office, Marco Mosca, President of Fiaip Milan and Luca Simioni, Regional President of Fiaip Lombardy, the national project Fiaip Monitora Italia was presented, concluding today with a focus on the city of Milan, after two weeks of presentations of Fiaip National Observatories in all Italian provinces and regions, reflecting the real state of the market in 2023 and forecasts for 2024.

"In 2023, we recorded a slowdown in the primary housing market, but at the same time a significant increase in real estate purchases for investments aimed at generating rental income, especially for short term, as this is considered safer and more profitable," emphasizes Francesco La Commare, President of the Fiaip Research Center.

“The lack of housing options for both sale and rent, especially in large cities, is concerning, leading to rising prices. However, the outlook for 2024 remains positive in light of the renewed confidence brought about by the halt in the rise of mortgage rates and inflation, which will ease access to housing,” comments Franco D'Amore, Vice President of I-Com.

"Real estate continues to be the most sought-after and reliable investment for protecting the savings of Italian families, which have been seriously affected by inflation," says the national president of Fiaip, Gian Battista Baccarini.

"It is now necessary to increase the supply of housing in the market, both for sale and for rent, by accelerating the development of a national housing program, which cannot be achieved without real interaction between the public and private sectors. This program should include clear guidelines for all cities to provide, on one hand, a structured program for social and public housing in local urban plans, and on the other hand, incentive criteria for private initiatives, both technical and tax-related, aimed at facilitating access to housing and generating positive effects for market development, society, and the national economy as a whole."