In this article you will find the highlights of the real estate report released by the Internal Revenue Service in cooperation with the ABI (Italian Banking Association). If you wish to download the full document you will find it at the end of the article!
2020 is known to have been a terrible year.
Lockdowns, colorful regions, masks and curfews have been the main topics in the daily news. Economic repercussions have also been a source of media interest, no less the fate of the peninsula's real estate market, which has always been an important driver of the beautiful country's economy.
Only today, in June 2021, can we draw some sums of how things really turned out, in defiance of all the predictions made.
I must admit that I, too, joined the chorus of "pessimists" who predicted considerable COVID-19-related effects on the housing market, and for that, I apologize.
Despite authoritative opinions, the Italian real estate market has proven (as in years past) to be robust and resilient to economic crises.
It is a few weeks since the Internal Revenue Service released its annual report on housing market trends, an authoritative source of what has happened in the past 12 months.
The data compiled for the residential market show a decrease of only 7.7 percent compared to 2019, with a total of 557,926 transactions completed compared to 604,168 in 2019.
A physiological decline brought about by the more than two months of general halt of the first hard lockdown, which obviously prevented home seekers from being able to carry out their activities to finalize transactions.
Variations all in all contained when we consider the impact the virus has had on other sectors of the economy.
Of these 557,926 purchases and sales, about 273,000 were made with the help of a bank loan. Total transactions generated sales of about 98 BILLION euros, down 8.7 percent from 2019.
HOW HAS THE RENTAL MARKET CHANGED WITH COVID?
Interestingly, residential leases followed indicatively the same reduction in percentage terms of the number of transactions. In 2020, 1,289,339 residential leases were transmitted to the ADE compared to 1,414,350 in 2019 determining a -8.8 percent. It is a different matter, however, if we talk about leases for non-housing use, here the negative sign is in double digits with -20.8 percent compared to the previous year.
WHAT ABOUT THE PRICES?
The report of the Internal Revenue Agency does not go into the changes recorded in real estate values. In fact, the declines that have been recorded (for the residential sector) have been very small, in and around the provincial capitals, while in the suburbs the effects of the economic "depression" have been felt more...
Basically, the overall changes in values were minimal, once again confirming the strength of the Italian real estate market.
PERSONAL CONSIDERATIONS
As a market participant, I am convinced that the reasons for the strength of our market are due to the low prevalence of underlying home debt (according to data from the OMI report, only 50 percent of transactions last year were with mortgages). In Italy, many owner-sellers do not have the need to sell at all costs in order to smooth out debt situations, so the famous "I don't want to sell out but to sell" means that properties remain unsold rather than being sold at lower values.
In these months we will experience the post-pandemic BOOM with a strong economic rebound in all sectors. It is to be hoped that the release of layoffs will not create a ripple effect on the economy, but I think the maneuvers put in place by the government are going in the right direction. The 110% bonus has given a great boost to the sector (try looking for a mason or a company to come and do some work on your house and then you tell me if you find someone available before 4-5 months) commodity values have skyrocketed and forecasts are talking about increases in GDP beyond what is expected.
We can say that it is no longer raining, and the clouds are clearing, giving some glimpses of light!
This year and a half of black crisis has been no small gymnasium, and I hope it has taught us that even the most unshakable certainties can sometimes fail.
