A negative week ends for real estate indices, while tensions between the United States and Iran continue to grow. Tehran has rejected the 15-point plan proposed by Washington, claiming the exclusive right to decide when and how to end the conflict. The prospect of a truce, on which many investors were counting, thus appears increasingly distant and energy prices begin to rise again, fueling fears of new inflationary pressures. A framework that places the central banks’ next moves at the center, which are decisive for the cost of credit and therefore for demand in the real estate market.
A more prudent and more restrictive Fed
The Federal Reserve finds itself faced with a more complex picture on the monetary policy front, caught between the resurgence of inflationary risks linked to the war in Iran and the need to continue the normalization of its balance sheet. The statements by governors Lisa Cook and Stephen Miran, speaking at two separate events, outline a more prudent central bank oriented towards maintaining a restrictive posture for longer. The positions of the two governors converge on a central point: the Fed is not ready to declare victory over inflation and, indeed, sees new risks on the horizon. The combination of geopolitical pressures, rising oil prices and a desire to reduce the balance sheet suggests that monetary policy will remain restrictive for longer than expected just a few weeks ago.
The performance of the sector on the stock exchange
The real estate sector in the Milanese market closed the eighth quarter in negative territory with the FTSE Italia All Share Real Estate index dropping 4%. More limited losses for the sector, at a European level, with the Stoxx 600 Real Estate index losing 1.8%.
Among the real estate companies listed on Piazza Affari, IGD lost over 5% while Gabetti and Abitare IN both fell by around 2.8%. On the upside side, Risanamento is positioned which rises by 7%. Furthermore, Aedes did well, earning almost 6%.
Macroeconomic data
In the week to March 20, the index measuring the volume of mortgage loan applications recorded a decline of 10.5%, after the -10.9% recorded the previous week. The index relating to refinancing requests decreased by 14.6%, while that relating to new applications fell by 5.4%. The Mortgage Bankers Associations (MBA) indicates that rates on 30-year mortgages have risen to 6.43% from the previous 6.30%.
Sector studies
“The escalation of the conflict, with the direct involvement of Iran and other Gulf countries, is influencing interest rate expectations. Tensions in the area are in fact pushing up oil and gas prices and risk compromising global supply chains, with possible effects on inflation. The Central Banks could be forced to reverse course in their monetary policy even if in the meeting on 18 March 2026 the European Central Bank, with reference to the conflict in the Middle East and in line with what the Fed did the previous day, it kept interest rates unchanged”, states Oscar Cosentini, President of Kìron Partner. “The interest rate scenario, he adds, will depend on the intensity and duration of the conflict in Iran and on how energy prices will affect general inflation”.
In fact, an increase in oil prices translates into higher costs for consumers and businesses with the consequent risk of increased inflation, which could lead Central Banks to increase the level of interest rates. In this regard, in recent days the ECB staff has formulated some possible future scenarios. In the worst scenario, which the ECB identifies as “severe”, 2026 GDP growth would be reduced to 0.4% compared to 0.9% in the already announced basic scenario and 0.6% in the intermediate scenario, defined as “adverse”. In the extreme scenario, inflation could jump to 4.4% against the 2.6% expected in the basic scenario and 3.5% in the intermediate scenario. The severe scenario assumes a stronger and more persistent energy price shock than the baseline scenario, greater uncertainty, and even more intense indirect and second-round effects. In the USA, the Fed could already respond with more aggressive approaches at its next meetings to counter an increasingly realistic increase in inflation. At the moment the rate reduction policy seems to have been put aside.
