High rates, shortage of new houses and Superbonus slow down buying and selling

In the first three months of the year, the residential property market nationwide fell by -7.2% compared to the same period last year, with 154,770 transactions. Among the main metropolitan cities, the biggest drop was recorded in Milan (-13.2% and 5,141 transactions), followed by Turin (-10.2% and 3,193 transactions) and Rome (-6.9% and 7,703 transactions). According to Abitare Co.'s analysis, the main reasons for the slowdown include: the lack of supply of new and energy-efficient homes, uncertainty about the outlook for one's own economic situation and the drop in purchasing power, the negative sign of investments in the residential sector (-35% in the first quarter of 2024) and the withdrawal from the market of properties renovated with the Superbonus due to the higher taxation resulting from any capital gains. As for homes bought with a mortgage, we are at an all-time low with just over 56,000 transactions, or 40% of the total, corresponding to the increase in the cost of money adopted by the ECB to combat inflation.

In the pre-Covid era, nationwide, households buying homes with a mortgage accounted for around 53 per cent of the total; this means that in less than five years, homebuyers resorting to mortgages have dropped by thirteen percentage points. As Giuseppe Crupi, CEO of Abitare Co, explained, 'the lack of supply of new homes weighs particularly heavily on the buying and selling trend in this segment. Only Milan recorded a share of over ten per cent (12.6%) with 648 sales.

In Rome, 670 new houses were sold in the first quarter of this year, which corresponds to only 8.7 per cent of total sales. In the country's other large cities, sales of new homes did not even reach 100 units at the end of the quarter. Uncertainty about the prospects of one's economic situation and declining purchasing power is an important factor influencing household choices. Investments in residential property have fallen sharply by more than 50 percentage points from the end of 2022 and throughout 2023, mainly due to rising interest rates. The EUR 120 million invested in Italian residential in the first quarter of 2024 confirms the negative trend with a drop of about 35 per cent compared to the first quarter of 2023. In a city like Milan, which polarises about 80 per cent of investments, the trend decline today is 28 per cent.

In addition, Crupi points out that 'a part of demand has withdrawn from the market after renovating a house with the Superbonus. Counting the taxation of capital gains and the transfer of deductions, it is always possible to sell a property on which you have carried out efficiency works subsidised with the 110% Bonus, but it is also true that there are several aspects to pay attention to. One of these is related to the increase in the value of the property determined by the efficiency works: this increase in value, although positive, leads to higher taxation at the time of sale, especially taking into account the new provisions introduced by the Budget Law 2024.