Real estate slows down. Growth stuck at 1.5%

12 December, La Stampa

A cold, almost freezing, Christmas, for the residential property market, reporting little growth of transactions and with some areas that have already started showing negative numbers.

According to the latest analysis by the Revenue Agency, in the third quarter of 2017, the growth of transactions has stopped at 1.5%, supported by positive results in the Islands and the South. Still growth but, as the Revenue writes, “Significantly reduced compared to the results of the previous quarters (it was +3.8% in the second quarter of 2017 and +8.6% in the first)”, even though the recovery trend of the residential market has been growing uninterruptedly since 2014 and the effects of the recession of 2012 are almost completed reabsorbed”.

The trend has improved only in the Islands, gaining 4.0% (it was +0.9% in the previous quarter) and in the South with an increase of 4.4% and the minor cities grown by 5.1% and the provincial capitals by 2.4%. The lowest growth rate has been registered in the Centre with cities reporting -0.4% and the North-East decreased by 0.9%.

Nomisma: “a physiological drop”

The figures from the Revenue have been published shortly after those of Nomisma, which expressed a cautious optimism, to the point of seeing signs of a countertrend. “We come from two quarters of solid growth and a weaker summer – explains Luca Dodi, Nomisma Ceo – we’re expecting the last quarter to better than the third with a positive closure of the year” with a result around 5% at a national level. According to Nomisma, “all the signals show a general improvement of the market. Besides the transactions and the reduction of closing times, the offer-demand is more efficient, and a further consolidation of prices that could stabilise the demand”. Even though the conditions of the Italian property market are still uncertain due to the consequences of the tough economic crisis, with the country going towards a new phase of political and economic uncertainty”. According to Nomisma, the transactions will set by the end of the year slightly below 545 thousand unit. In comparison with 2006, the last year of the expansion phase, the residential market has reduced by approximately 36.6%, equal to 300 thousand closed deals less.

Milan, Genoa and the South

There are other elements characterising this situation. “There are more mature and developed markets such as Milan, where we’ve started noticing an increase in prices. On the other hand, there are less mature markets, like Genoa, where the offer hardly meets the demand. Bologna is inevitability going through a phase of stabilisation after a long boom of sales”. The numbers reported by the South are remarkable: “This is the natural consequence of the market, the recovery started from the North where is now gradually decreasing, and it is expanding in the South, where it started in delay”, explains Dondi. The economic and social context influence this situation, as well as the quality of the properties: “This is an important matter since in Italy we have definitively obsolete real estate assets and of very low quality”. If the newly constructed properties have been almost completely sold, developers and real estate agencies are left with thousands of old houses that nobody wants. “The incentives for renovation works have been beneficial but they’re not enough for an actual requalification that would require much bigger investments”, concludes Dondi.

Source: La Stampa

Translator: Cristina Ambrosi

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