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Saving has to recover to awaken real estate

23 May, Milano Finanza

The economic situation of the Italian families is improving and is gradually returning to the pre-crisis levels. This improvement is the essential condition to shake the property market which has been at a standstill for years. This is what emerges from the 2018 real estate report by the Revenue Agency in collaboration with the Italian Banks Association which was presented yesterday in Rome in the Abi headquarters.

In 2017, 90 billion was spent in Italy to buy a house, according to the report. More precisely, the Italian families spent 89.6 billion euro, registering a 3.7% increase compared to the previous year. The levels achieved in 2017 were the highest ever recorded since 2011 when the total turnover reached 99.5 billion. “The report shows the resilience of the Italian families”, commented the Abi director, Giovanni Sabatini. “Before the crisis, 25% of the families used to save money, while 13% had to use their savings to deal with expenses. These numbers changed during the recession: the money savers dropped to 14%, while those financially struggling raised to 31%. From the April 2018 figures, the money savers raised again to 28%, even better than before the crisis, while those in difficulties were around 15%”. These numbers also confirm the preference of Italian families for real estate. “Real estate represents the dominant quota in the wealth composition”, explains the report. “In Italy, 80% of the families live in a house they own or in life tenancy. Italy is the first country in Europe for this data”.

Sabatini also mentioned the sharp improvement of the affordability index, which expresses the purchasing power in relation to salaries. The report also shows that in 2017 the number of transactions in the residential sector grew by 4.9% compared to 2016. The transactions in 2017 were 542,480 (+4.9% on a yearly basis), registering a sharper growth in the north-west (+5.3%) and the south (+5.8%), while the centre reported a 3.5%. The survey stresses how Milan (+8.1%), Palermo (+7.9%), Florence (+7.8%) and Naples (+7.4%) registered the most significant increases, while Bologna a (-3.3%) is the only city that decreased. The drop of property values also continued last year, even though with more contained numbers in comparison with the previous years, setting around 0.4%. This fall in values is undoubtedly “one of the reasons for the recovery of transactions, together with the low interest rates and the improvement of the economy, occupation and salaries compared to the 2012-2013 period”.

Finally, the report shows a further growth of property purchases funded by a mortgage loan. In comparison with 2016, the property purchased with a mortgage were slightly below 260 thousand, increasing by 7.8%. Of the total purchased properties, those bought with a mortgage were 50% of the total, registering the highest value since 2011. In conclusion, real estate can benefit from the resume of savings.

Source: Milano Finanza

Translator: Cristina Ambrosi

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