Italy – Residential real estate
Residential transactions increased strongly in the first half of the year, confirming the dynamism of the market, supported by the increase in household purchasing power. However, prices have not accompanied the recovery in transactions. After reaching record highs in 2016, household housing credit production continued to decline in the first half of 2019.
However, prices did not accompany the recovery in transactions: in the first half of 2019, prices fell by -0.2% year-on-year (after -0.9% in H2 2018). This drop is the continuation of a long period of price decline, which began in 2009. After a period of fast growth in real estate prices between 2000 and 2008 (+82%, an annual average of 7%), the 2008 crisis triggered a sharp fall that lasted until 2013 (prices decreased 17% between 2008 and 2013). Since then, the price decline has been less steep. Over the period 2008-2018, prices dropped 25%. For transactions to recover more quickly than valuations means that there is a large amount of excess supply and too little demand to snap it up.Ticiano BRUNELLO, Economist