According to Intesa Sanpaolo's Mortgage Market Monitor, here is how the Italian real estate market currently stands and what trends have been affected at the beginning of 2022.
House purchase intentions at their peak
According to the ISP Monitor, the Istat consumer sentiment showed an increase of 0.7 percentage points in the share of those who expressed an intention to buy a new home during Q1 2022, to 4.7% (in the last quarter of 2020 it was 4.0%). This is equal to the all-time high recorded in the Q2 2019 survey.
On the other hand, the proportion of consumers expressing a willingness to undertake extraordinary home maintenance was slightly lower than in the previous quarter, at 22.2% in Q1 (24% in Q4 2021), thanks to continued strong tax incentives.
Residential real estate between recovery and new trends
In the first 9 months of 2021, the number of residential sales and purchases confirmed the rapid post-pandemic recovery, with over 536 thousand transactions, 161 thousand more compared to the same period in 2020 and a growth of 43.1%. Compared to the corresponding period in 2019, the number of properties traded was 23% higher, with 100 thousand transactions the difference. On a quarterly basis, Q2 saw the highest growth during 2021, up 26% compared to the corresponding period in 2019.
The shock caused by the pandemic has accelerated ongoing trends and introduced new dynamics in the real estate sector, for example, the rationalisation of offices linked to the spread of teleworking and the search for larger homes, perhaps with outdoor space. One of the biggest questions has been the configuration, quality and size of living spaces.
Looking for a larger home in the suburbs
The search for larger housing solutions has led to a greater focus on smaller towns, including those in the hinterland of metropolitan centres. From 2020 onwards, the dynamics of properties transacted differed between the main cities and the smaller towns, resulting in a slight shift in the number of properties transacted in favour of the latter. However, in Q3 the increases in the two aggregates were perfectly aligned (+21.9% y/y for both), confirming a partial recovery of the larger cities in the first 9 months of 2021.
Even looking at the breakdown by large areas, it is possible to see how the percentage of transactions in cities as a percentage of the total has decreased over time, to the benefit of smaller towns. In particular, although affected, as already mentioned, by a strong base effect, we note that the positive change in the first 9 months of 2021 compared to the same period in 2020 was much stronger for non-towns in all the large areas.
The search for more airy housing solutions is further confirmed by the composition of transactions by size, with a stronger increase for the larger ones.
More than 96% of the total transactions in Q3 2021 involved natural persons. This share remained above 95% throughout 2019 and 2020. Of this figure, in Q3, 68.7% were purchased with the "first home" benefit, which can be considered as a proxy for homes purchased as main homes3. We note that this percentage has decreased significantly in recent quarters. This may indicate an increase in investment purchases.
House prices recovering
The shock of the pandemic showed the resilience of residential property prices. In Italy, prices were already on an upward trend at the height of closings, although the very small transacted market may not have been indicative of the general trend in sales prices. Currently, however, the good momentum in the residential property market is seeing a combination of a decisive upturn in trade and a continued recovery in prices.
In this, the search for more spacious housing solutions and the resulting shift of interest towards the property markets of smaller towns compared to city centres may have given a positive impulse to prices. In the first 9 months of 2021, house prices rose by 1% for both existing and new homes. As we said, this dynamic is part of a recovery in property prices, which in 2020 recorded the best growth rate in the overall IPAB index since 2011.
On a quarterly basis, we note a certain consistency of the recovery in the short term: in the last 4 quarters the aggregate price index has always recorded positive changes (+1% on average), compared to a very erratic history. However, this trend is the result of different performances of the existing and new house components. The latter, despite the positive signs of recent periods, continued to show a certain variability in results from one quarter to the next.
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