New breath of fresh air for the real estate market, after this week’s European Central Bank decided on another 25 basis point cut to the reference rate, as everyone expected. As for the monetary policy path that Frankfurt will undertake in the coming months, the president Lagarde she remained cautious: “we are not open to any scenario. The disinflation process is well underway and all the information received in the last five weeks is pointing in the same direction, i.e. lower. This gave us the confidence to announce a new cut and this decision confirms that we remain strictly data dependent. Looking ahead, this means that the December decision will also depend strictly on the data.”
In the eurozone the growth of consumer prices slows to 1.7% in September and, analysts expect the next move of 25 basis points in December.
Meanwhile, in Chinathe plan to relaunch the real estate sector in crisis was presented, but received coldly by the world stock exchanges.
Benefits for those who pay a mortgage
“The reduction in the cost of money will be reflected in the Euribor rates, the index on which those of variable mortgages are calculated. Those who have chosen this type of financing will therefore see the interest rate lower, with the monthly installment decreasing by 20 euros on a 20-year mortgage of 150.00 euros”, he explains MutuiOnline.it.
According to the simulations of idealist/mortgagesthe installment of a thirty-year mortgage of 200 thousand euros at a variable rate with a spread of 0.75 percent drops from 1026 euros in January 2024 to 925 euros today – assuming that the ECB rate cut is completely absorbed by the three-way Euribor rate months, – with a saving of 101 euros per month and 1212 euros annually. Fixed rate mortgages are also decreasing, going from an installment of 843 euros per month on average at the beginning of the year for a mortgage with a 30-year maturity and a spread of 0.5 percent to the current 792 euros, with a saving of 51 euros monthly and 612 euros annually.
The performance of the sector on the stock exchange
The real estate sector has had a mixed week. The performance at a European level shows an increase in the Stoxx 600 Real Estate index of 0.4%, on a weekly basis, while Italy fared worse, with the FTSE Italia All Share Real Estate index, which took home a decrease of approximately 0.2%.
Real estate securities listed in Milan
Among the real estate companies listed on Piazza Affari, a negative week was recorded for Aedes (-3.4%), followed by Abitare In (-2.6%). Gabetti and IGD lost less than one percentage point. On the upside side, Risanamento did well, rising by 14%. Next Re also rallied, up 5.8%.
Macroeconomic data
Week full of ideas from the macroeconomic front. The usual numbers on the have arrived from the USA mortgage applicationswhich in the week to 11 October, showed a drop in requests of 17%, after -5.1% in the previous week. The index relating to refinancing requests fell by 26.3%, while that relating to new applications fell by 7.2%. There Mortgage Bankers Associations (MBA), indicated that 30-year mortgage rates rose to 6.52% from 6.36% the previous week. It appears to be improving US real estate confidencesummarized by the NAHB index. In October, the figure stood at 43 points, compared to 41 points in the previous month. The data is in line with consensus expectations. As regards the individual components of the index, the one on current sales rises by 2 points to 47, the one relating to sales in the next six months grows by 4 points to 57 points, while the one representing the traffic of potential buyers rose by 2 points at 29. The indicator, developed by the National Association of Home Builders (NAHB), represents a summary of builders’ sales expectations in the present and over the next six months: a reading below 50 shows a prevalence of negative judgments, while a higher level indicates greater optimism.
Sector studies
The new data for the first half of 2024 processed by the Group Research Office Tecnocasa recorded a price increase of 0.9% in the large cities, with the exception of Palermo with -0.4%, the best result was in Florence with +3.2%. Milan recorded a +1.3%, the capital closed with +0.6%.
In the first 9 months of the year, a positive wind is blowing on the demand for mortgages from Italian families, pushing the number of queries to +7.2%. If we look at the single month of September, demand reaches almost +19% (Source: the EURISC Credit Information System). To analyze the data in its entirety, we observe that in the first half of the year the phenomenon of surrogates marks a +17.6%, while new mortgages granted fell by -10.5%. In the third quarter of 2024, the average amount requested undergoes a slight increase (+1.6%), with a total value of 146,469 euros; the same trend recorded in September with a +1.8%. “A monetary policy that returns to being expansionary, and with possible further rate cuts for the end of the year, instils greater confidence in Italian families who return to planning long-term expenses. Another driving force for the real estate mortgage sector will be the effect of the Green Homes Directive (EPBD). In fact, from our observatory we predict that green financing will reach percentages ranging between 24-30% in 2030 and in 2050 more than one mortgage in two will be green”, explains Simone Capecchi, Executive Director of CRIF.
