In this article you will find the latest considerations regarding the 2020 real estate market, a peculiar year in all respects. To base my considerations I will take, as in previous reports, the latest market update released by Nomisma, a well-known Italian statistical agency
In previous episodes.
In April this year, I had reported to you the forecasts made by Nomisma that predicted 3 types of scenarios:
One "soft" one which projected 2020 closing at 564.000 purchases and sales
One "basic" with 494.000 trades
and finally one "hard" with 479.000 trades
Fortunately the most optimistic predictions turned out to be correct . According to the "Christmas" interview I conducted in December with Luca Dondi ( yes I am wearing a sweater with Santas ) the most catastrophic scenarios were avoided thanks to the post lock-down rebound.
In November, new forecast data for 2020 were released that basically support the most optimistic scenarios. In fact, according to the statistical agency, 2020 will end with about 500,000 purchases and sales in line with the baseline scenario profiled in recent months, but with about 100,000 fewer buys and sells than 2019.
As you can see from the graph, the curve is not like the previous one that indicated a major reduction in transactions even for the next three years, but according to the economic projections, we will soon return to a normal situation ( 2023/2024 ).
Real estate market values 2021
Another consideration that emerged during our last live facebook discussion is the incredible ability of the housing market to hold down price reductions compared to a national economy that has lost 10 to 15 percent over this period
in the face of a double-digit change in GDP, it appears that real estate market values may have a very slight decline, if at all, in 2023 ( imperceptible but still positive ).
How will the housing market fare in 2021?
In essence, this 2020 showed us again that the Italian real estate market benefits from strength in terms of capital preservation, which is largely covered by potential profitability derived from leasing.
Recent regulatory interventions (110% bonus) are strategic expedients as they allow for the redevelopment of "old" urban heritage, as a recent Sun 24H article mentions
The wealth of Italians lies in the homes they own, totaling nearly 5.4 trillion euros. However, the wealth is deteriorating and urgent action is needed to put it back in good condition. Two-thirds of Italy's 35 million homes were built more than 50 years ago and only 9 percent in this century. In addition, according to a survey by Scenari Immobiliari, there are at least 73 thousand buildings (for more than half a million apartments) that can be defined as severely deteriorated. And several bills on "urban regeneration" are being discussed for these. Awaiting new measures are various regulations for families and condominiums upgrading their properties.
The Italian has always had a thing for bricks and mortar, and as long as there remains active demand, market values and transactions will continue to occur.
Final summary
- We "only" lost the buys and sells related to the 2 month stop
- The economic effects of the pandemic have not yet arrived, between the suspension of foreclosures and evictions, suspension of layoffs etc. everything is frozen, but soon this amount of problems will impact the market
- Prices for the moment have held ( will they hold even with the effects of the economic crisis?).
- Delays related to the disbursement of credit are being felt, from the 45 days it used to take for a resolution we are now down to 3 months. This will slow down 2021 quite a bit.
- The worst blow will fall on the commercial and office/retail sector, with declining rents (lower rents) and consequent drop in values
