02/07/2024 - In the first three months of the year, the national residential real estate market fell by -7.2% compared to the same period last year, with 154,770 sales recorded. Among the major metropolitan cities, the biggest decline 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).
Moreover, considering only new homes sold in large cities (a total of 1,624), their share does not reach 7% of total sales, with transactions down -23% compared to the same period in 2023*.
According to the analysis by Abitare Co. – a real estate intermediary and service company specialising in new developments – among the main reasons for the slowdown are:
• the lack of supply of new and energy-efficient homes,
• uncertainty surrounding households’ economic outlook,
• the decline in purchasing power,
• the negative trend in residential investments (-35% in Q1 2024),
• and the withdrawal from the market of properties renovated through the Superbonus, due to higher taxation related to potential capital gains.
Regarding homes purchased via a mortgage, the market is at historic lows, with just over 56,000 transactions, equal to 40% of the total.
The share of families buying with a mortgage has decreased year after year, following the rise in interest rates implemented by the ECB to counter inflation. Before Covid, at the national level, families purchasing a home with a mortgage accounted for about 53% of the total; this means that in less than five years, mortgage-based buyers have fallen by thirteen percentage points.
"Although the last quarter of last year had recorded a slowdown in the negative trend of property sales (-3.3% compared to Q4 2022), the first three months of the new year remain firmly in negative territory"
– said Giuseppe Crupi, CEO of Abitare Co. –.
"There are various factors hindering a true recovery in transactions: selling prices, which have risen with double-digit annual increases in major cities, combined with households’ purchasing power, are dampening buying intentions; many struggle to access credit – it is no surprise that not even 40% of buyers now take out a mortgage. There is also a lack of new, energy-efficient homes aimed at buyers with limited budgets, such as young people looking to purchase their first home and who tend to be the most sensitive to environmental issues."
Detailed analysis
The lack of new housing supply weighs heavily on transaction levels in this segment.
Only Milan records a share above 10% (12.6%) with 648 sales.
Rome sold 670 new homes, corresponding to just 8.7% of all sales.
In the other major cities, new home sales do not even reach one hundred units by the end of the quarter:
• Florence: 92 sales (8.1% of total)
• Naples: only 35 sales (1.9% of total)
• Genoa: just 8 new homes sold in three months (0.4% of total)
Economic uncertainty and declining purchasing power strongly influence family decisions, especially those involving large capital commitments such as buying a home.
Savings propensity, after reaching its peak in 2020 during the pandemic, has gradually decreased in the following years to support household spending and offset the loss of purchasing power caused by inflation.
Residential investments have suffered a sharp decline of over 50 percentage points from late 2022 and throughout 2023, mainly due to rising interest rates.
Investments totaling €120 million in the Italian residential sector in Q1 2024 confirm the negative trend, with a decline of approximately 35% compared to Q1 2023.
In a city like Milan, which absorbs about 80% of investments, the current year‑on‑year decrease is 28%.
Demand for new homes, not only in the high-end segment, increasingly values energy consumption considerations, environmental impact, and shared services for residents. Unfortunately, the supply of such homes remains very limited.
Part of demand has withdrawn from the market after renovating homes using the Superbonus.
While it is still possible to sell a property renovated under the 110% scheme, several factors must be considered. One of these is the increase in property value resulting from the improvements: although positive, this increase leads to higher taxation at the time of sale, especially given the new rules introduced by the 2024 Budget Law.
Source: Abitare Co. elaboration based on data from the Real Estate Market Observatory (OMI) – Italian Revenue Agency
For information:
Abitare Co | Tel. +39 02 48.95.84.16
Via Savona 52, 20144 Milan (MI)
info@abitareco.it | www.abitareco.it
*OMI – Italian Revenue Agency, Q1 2024
