After the last article I wrote in which I report on Nomisma's April updated data, I would like to take off my reputation as a "greaser" of bad news and try to unearth for you, the avid real estate reader, some glimmer of hope.
I have to admit, finding positive arguments right now is a bit like truffle hunting but, being the good bloodhound that I am, I think I have sniffed out a lead.
Of course, it won't be White Truffle of Alba....butin these weeks we can also be content with a black scorzone with which to make a nice fresh egg pasta noodle!!!
Let's see what's the trend in demand for home purchase during the coronavirus
The preponderance of information that can be found online is data on projected sales values and the number of transactions expected in the coming years.
Today I'm going to gather for you some data on the aggregate demand for homes in Italy, to see if the demand is there and will be there in the future.
Let's start with an authoritative figure from a publisher that holds the information of 8 out of 10 properties on the Italian market: Immobiliare.it
The well-known portal published in early April a report it carried out by interviewing about 18,000 users of its service who were interested in buying homes, asking them questions related to their purchase intention in the coming months.
The figure is, from a certain point of view, positive:
- 30.1% of respondents stated that " they are concerned but not planning to shelve the idea of buying a home."
- 22.7 percent feel more optimistic in research
- For 16% finally, this situation is not having any influence on the decision to purchase a property
The survey found that the motivations for why people are looking for homes have a different reaction to the crisis generated by COVID. Made 100 the number of users who are considering postponing their purchase
- 37.2 percent are parents who are looking to buy a home for their children.
- 33.9 percent are those who are looking for property for personal investment.
- 28.7 percent are first-time home seekers.
It is clear that the need to buy a home, that innate need that every Italian feels as a primary need, remains a very powerful lever that is difficult to eradicate. Of the sample analyzed, only one in three Italians is thinking of postponing the search for real estate, which, in my opinion, can be considered positive news. In the attached report you can check other data reported by the portal.
It does not miss the retort of another BIG of Italian real estate portals: casa.it
From the survey published on 4/28/04 on a sample of over 3700 users, the well-known site found the following:
- 62% of users who are looking for a home to buy have not changed their minds about searching
- 17% are even more convinced to buy a new home
On the other hand, those who said they would postpone the purchase have several reasons:
- 35% do so in the hope of falling prices in the coming months
- 33% hesitate because they are intimidated by the commitment involved in taking out a mortgage
- 10% fear losing their jobs
- 9% fear an increase in property taxes
- 13% postpone for other reasons (always related to coronavirus)
The portal highlights that those who have decided to postpone the purchase are a type of user interested in a vacation home or an investment, confirming (as imm.it) that the need for the"first home" remains"strong."
You can find a summary of their survey in this video.
Another interesting statistic to analyze is the decline that has occurred in real estate searches on all national portals. The figure (reported by the website coachimmobiliare.it) by Gianluca Capone, is significant but not apocalyptic. The average visits in March 2020, the first month of lockdown, compared with the visits in the same month of the previous year of the major Italian real estate portals, shows an average drop of "only" 42.5 percent. The remaining traffic to these sites, identifies an interest that endures despite the difficult situation
On a personal level, I had the pleasure of interviewing Simone Rossi, founder of a portal ( Gate-away.com) specializing in offering Italian properties to foreign clients. Needless to say, the initial period of the emergency and the blocking of international flights led to a sharp drop in inquiries compared to the previous year(-35% in March compared to March 2019) but this negative trend has decreased already in the first week of April(-11.27%) suggesting that foreigners' interest in Italian real estate has not disappeared.
Now we come to the final considerations.
Given that, as the survey by immobiliare.it and casa.it showed, the Italians' desire to buy their first home is a sticking point that is hard to shake, we have to reckon with the economy we will end up with.
Despite the strong desire, in more than 10 years in the business I have never made a purchase where the purchase consideration was paid in "wishes." The accessibility of credit for all those who want to buy homes will be a crucial issue in the months to come.
It is plausible that lenders are tightening the mesh of disbursement in view of the less stable employment situation of mortgage applicants. This will be the major problem of the future. To support persistent demand there is a need for liquidity, and without the guarantees of stable employment, banks are unlikely to grant this liquidity.
Concluding
Is there a demand for purchase? Yes.
Will fewer houses be sold? Yes
Will there be a decrease in prices? In the long run, it is likely
Will there be a freeze in the real estate sector? In my opinion, no
Domestic demand will also be stimulated by the fact that those who were dissatisfied with their property before the quarantine period ended will be even more motivated to change homes. Of course, only those with "above-average" availabilities will be able to do so, but it still remains a demand to work on!
I also had the opportunity to interview the CEO of Casavo, a new player in the national real estate market that has just landed in Verona, who says he has not given up on making his purchases ( casavo is an Ibuyer who buys real estate and then resells it)
In addition to these buyers will be added speculators who (unfortunately) strong in the need for liquidity of some, will take advantage of the situation with cash interventions and "quick" purchases.
I remain of the opinion that the market will be there, maybe at different values but still remain active.
