Grey weather, but for now sales increase

This may sound like a cynical remark, but it is the reality of numbers: the Covid has done well to the real estate market in Italy and Europe. In the five post-pandemic years the market (understood as turnover value) grew by 45%, exceeding one trillion. In Italia the growth was 56%, ranking first among the big European countries. Undoubtedly there is the psychological effect of euphoria after the storm, but there have been profound changes in demand, while supply is stuck in last century's models. And the changes affect all European countries, with little variation. There is a return to the 'centrality' of the home as a gathering place for family and friends. For the many who have worked or continue to workin smart working it must combine leisure, rest and work. If the needs are new, the home one seeks must be different than before: larger spaces, light, quiet, close to services.

New ventures can only partly meet these needs, because the scarcity of areas on which to build (and high prices) lead to smaller, peripheral houses. So there is a lot of renovation and investment in the sector is close to 600 billion per year in Europe.

After Covid, average prices in Europe rose by 25.4 per cent and in Italia by 15.5 per cent. But in the big cities it is 40 to 50 per cent higher. In Italia, since 2021 buying and selling are steadily above 700 thousand units per year, with a forecast close to 800 thousand by the end of 2026. A positive sequence rare in our history. And the contribution of new houses is marginal: just over 60 thousand each year.

What prospects are there with an economic and political climate that is, with understatement, considered 'grey'? The underlying drives, seen above, are strong. Migratory flows to big cities (where it is easier to find work and social integration) are increasing. The alternative of renting becomes everywhere a narrow path between tourist demands and other transient city users (students, workers). Thus the pressure is bound to remain high. A slight increase in inflation could ease the pressure. Based on the past, if inflation remains within 5%, market with slight decline. Between 5 and 8%, significant drop (around 10-15%). Inflation above 10%, major market decline, up to 20-25%.

Italians like home ownership. It is not just a slogan but reality with almost 80% of families, 30% having at least a second one. A centuries-old tradition, which the disappearance of renting for so many years and regulations facilitating purchase have helped to strengthen. In the long term it certainly defends against inflation. Compared to 1976, the average house value has doubled the inflation rate. In Milan and Rome it has tripled it. In the medium term, however, competition is strong. In twenty years, only 23 capitals have exceeded inflation and 44 over ten years. A good investment, but not everywhere.