Property market

Recovery of the real estate market in Italy, except in Milan: analysis of Q2 2024 data

After a period of declining residential sales, the Italian real estate market seems to be recovering in the second quarter of 2024, with the exception of Milan. The increase in purchases is driven by smaller municipalities and the North and Centre of the country.

by Paola Dezza

12 September 2024

Diritto alla casa, sit-in comuni italiani a Montecitorio per una legge

3' min read

Key points

Recovery of sales from April to June 2024 (+1.2%)
Mortgage transactions increase (slightly)
The rental market suffers from rising rents and falling demand

3' min read

Will the second quarter of 2024 be the watershed between the crisis in residential sales and the recovery? A legitimate question after the latest data published in the Observatory of the Italian Revenue Agency on 12 September, a report that records a recovery in house sales in the period between April and June 2024.

After a 2023 that had to absorb a drop in residential sales of just over 10% and the first three months of this year in which the decline continued in the region of 7%, a glimmer of light seems to be appearing again.

From April to June 2024, therefore, about 186,000 homes were sold, more than 2,000 more than in the same period of 2023 (+1.2%). The most pronounced growth in sales occurred in the first month of the quarter under review, amounting to +7% on average nationally and of similar intensity in both the smaller municipalities and the capitals.

IL MERCATO DELLA CASA NEL SECONDO TRIMESTRE 2024

All geographical areas of the country are affected by the increase in transactions. The increase in purchases is more marked in the Northern and Central areas. Smaller municipalities drive growth with a variation of +1.6%, higher than that recorded in the capital cities (+0.2).

The role of the expected rate cut

Possibly dictating the change in trend were the expectations of interest rate cuts, which actually took place at the beginning of June. As interest rates on mortgages continue to fall, the share of purchases with a mortgage increases. "Purchases by individuals made by taking out a mortgage exceed 41 per cent (up) and the average initial interest rate continues to fall, 28 basis points lower than in the previous quarter," reads the report. "The capital that financed home purchases amounted to about EUR 9.6 billion, 0.5 billion more than in the second quarter of 2023.

The increase in exchanges affects all size sizes, but in particular small houses, under 50 sqm, and very large houses, over 115 sqm, are being bought and sold, both types growing by about 2 per cent.

Milan's step backwards: -7%

The performance in the eight largest cities by resident population is spotty, with Milan experiencing a drop in transactions of more than 7 per cent. Rome, on the other hand, is doing well. The trend is also changing in the rental segment, to which many Italians who have preferred to postpone their purchase in recent semesters had moved. In the second quarter of 2024, just over 202,000 homes were rented out, 2.7 per cent less than in the same quarter last year. The decline affects residences located in municipalities with a high housing pressure and in municipalities that are not, in both cases with a trend decline of more than 2%. It is worth remembering that the rental market is also affected by the scarcity of supply on the market.

Student rents on the rise

On the other hand, the annual rent for residential leases registered in the second quarter of 2024 grew by 2.6 per cent, amounting to a volume of more than EUR 1.3 billion. The report states that ordinary long-term contracts concluded for the rental of residential properties in their entirety contracted by 5.5 per cent compared to the second quarter of 2023, a figure that is close to -6 per cent if only municipalities with a high population density are considered. The total annual rent for this segment remained stable at around EUR 656 million, just 0.1% higher than in 2023. There was a slight increase in the number of dwellings rented with ordinary transitional contracts, i.e. with a duration of 1 to 3 years, accompanied by a significant increase in the annual rent, +6.7% compared to the second quarter of 2023. For the market of leases with an agreed rent, new contracts are slightly down, -1%, and the total annual rent amounts to 385 million euros, up 3.4%. The segment of leases with subsidised rents for students shows a strong increase in both the number of units and the rent.

Paola DezzaCaporedattrice del Lunedì e responsabile del settore real estate per tutto il gruppo
- @24paoladezza
Lingue parlate: inglese, francese
Argomenti: mercato immobiliare, architettura, finanza immobiliare, lifestyle, turismo, hotel e ospitalità
Premi: “Key player of the italian real estate market” di Scenari Immobiliari
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