Real estate: Surge in inflation pushes Italians to invest

In 2023, despite a general decline in residential sales, real estate investments aimed at getting a rental income showed how houses continue to be the most sought-after and safest real estate investment to protect italian families’ savings- heavily hit by inflation- based on data from the Fiaip National Real Estate Observatory, ENEA and I-Com (Institute for Competitiveness), regarding the performance of the real estate market last year and the forecasts for 2024. A focus on the city of Milan was illustrated, which in 2023 once again ranked as the most vibrant and attractive real estate investment capital in Italy.

The Report, presented in Milan at the Banco BPM headquarters, highlights that in 2023 the overall number of residential sales dropped, falling to approximately 700,000 (-10% compared to 2022), with a plunge in sales of first homes, compared to an increase in investments of personal savings, double compared to 2022, which led to a growth in sales of second homes (+1.5%). These data, together with an increase in sales of studio apartments, fivefold compared to 2022, and two-room apartments (+64%), motivated the considerable increase, in 2023, in real estate investments aimed at a rental income (+ 28% ).

Market values recorded a 2% average increase (2023 over 2022). The highest were recorded in large urban centers, where demand far exceeds supply, with a peak of up to +6% in the city of Milan.

For uses other than residential, both sales (shops +0.2%, offices -0.2%, warehouses +0.1%) and prices (shops -0.1%, offices -0. 2%, warehouses +0.3%) followed the same trend as in 2021 and 2022.

The Focus on energy efficiency, however, shows that in 2023 the percentage of real estate units sold in class G decreased significantly compared to the previous year, especially for two-room apartments (9% in 2023 compared to 27% in 2022) and for terraced houses (20% compared to 24% in the previous year). Overall, all building types (new, renovated and to be renovated) showed a significant increase in real estate units sold in class D. Furthermore, for the third consecutive year, a growth in sales of renovated properties with high energy performance was recorded, which reached almost 38% of the total for this class of buildings

62% of buyers (54% in 2022) were aware of the importance of the energy performance of a property, showing how energy quality increasingly matters in housing selection, probably as a result of energy price increases and inflation which marked the first half of last year, while 62% of those interviewed (58% last year) believe that the APE (Energy Performance Certificate) helps potential buyers choose more energy efficient properties. Finally, 52% of real estate agents believe the 110% Superbonus tool has significantly influenced the dynamics of the real estate market.

Fiaip real estate agents reflect optimism for 2024 both due to an announced reduction in interest rates on mortgages and a decline in inflation. In fact, a sales trend similar to 2023 is expected, with a further increase in investment purchases and a stabilization of property prices (+3% only in large centres). For residential rentals, both a +3% increase in contracts and a further +5% average increase in rents are estimated, while for uses other than residential (shops, offices and warehouses) for both sales and rentals a 1% average growth in transactions is expected, but with a 2% reduction in both prices and rents.

The Report was presented by Francesco La Commare, President of the Fiaip Study Center, together with Francesca Hugony, of the ENEA Energy Efficiency Unit Department and Franco D'Amore, Vice-President of I-Com, with the analysis and final comments by the President of Confedilizia Giorgio Spaziani Testa and the National Fiaip President Gian Battista Baccarini, while the focus on the performance of the real estate market in Milan and its province was illustrated by the Head of the Fiaip Milan Observatory Sara Frizza.

After the opening greetings from the Commercial Manager of Banco BPM Matteo Faissola, the Provincial President of Fiaip Milano Marco Mosca and the Regional President of Fiaip Lombardia Luca Simioni, the national project Fiaip Monitora Italia was presented by the President of Fiaip Gian Battista Baccarini, which closed with a Focus on the city of Milan, after two weeks in which real estate observatories were presented in all Italian provinces and regions by the Fiaip territorial colleges, effectively expressing the real trend of the 2023 market and the forecasts for 2024.

 “In 2023 we recorded a slowdown in the first home market and at the same time, a considerable increase in investment purchases aimed at a short-term rental income, considered safer and more profitable” – pointed out the President of the Fiaip Study Center Francesco La Commare. “The scarcity of houses for sale and for rent, especially in large urban centers, which has caused prices to increase, is alarming, although the prospects for 2024 remain positive due to a renewed climate of confidence mainly caused by a stop in mortgage rates and inflation increasing, which will favor access to housing.”

 “The FIAIP Report, said the Director of the ENEA Energy Efficiency Department Ilaria Bertini, also this year stimulates important reflections on the actions necessary to support the medium-long term challenges linked to the redevelopment of the Italian real estate stock.”

 “Various indicators from this year's report makes us cautiously optimistic about the real estate market's response to energy transition,” said I-Com Vice President Franco D'Amore. “Certainly the energy quality of a building is not among the main drivers of demand yet although, for the third consecutive year, the percentage of properties renovated and brought into the best performing energy classes before being placed on the market is growing. In many types of properties there is a noticeable increase in class D, to the detriment of less performing classes. We are far from the change of pace necessary to decarbonise the construction sector within the next 25 years, but the signs of a trend reversal are clearly visible.

“Real estate continues to be the most sought-after and safest real estate investment to protect italian families’ savings, heavily hit by inflation”, said Gian Battista Baccarini, National President of Fiaip. “Now it is necessary to increase the housing supply on the market, both for sale and for rent, by accelerating the definition of a national housing plan including a concrete synergy between public and private and provide for clear guidelines for all Municipalities, so they can foresee in their urban planning a structured plan for social and public residential housing and incentive criteria for private initiatives, both of a technical and fiscal nature, aimed at facilitating access to real estate, with consequent positive effects for a vibrant real estate market,  the community and the entire national economy".