Breath of fresh air for the real estate marketafter the European Central Bank this week opted for a second cut of 25 basis points at the reference rate, as everyone expected. The Frankfurt institution has not provided any guidance on the future path of rates, which remain at high levels, even if the forecasts for growth and inflation are consistent with gradual cuts in the coming months. Analysts expect the next move of 25 basis points in December, while in October the cost of money could remain unchanged unless there are surprises in the data releases.
The ECB’s decision to cut rates will lead benefits for those who find themselves paying a mortgage. According to idealista/mutui simulations, the installment of a 30-year mortgage of 200 thousand euros at a variable rate with a spread of 0.75 percent drops from 1,026 euros in January 2024 to 985 euros today, with a saving of 41 euros per month and 492 euros per year. Fixed-rate mortgages are also decreasing, going from an average monthly installment of 843 euros at the beginning of the year for a mortgage with a maturity of 30 years and a spread of 0.5 percent to the current 819 euros, with a saving of 24 euros per month and 288 euros per year.
The performance of the sector on the stock exchange
The real estate sector had a good week at European level, where the index Stoxx 600 Real Estate signaled a +2.5% on a weekly basis, even though the ECB’s decision was largely discounted by the markets, so much so that there was no major reaction to the announcement from Frankfurt on Thursday afternoon.
A marginally better performance was achieved by Italy, where the index FTSE Italia All Share Real Estate showed an increase of around 2.6%, doing better than the FTSE MIB index which closed the week with a slight decline.
Real estate securities listed in Milan
Among the real estate companies listed on Piazza Affari, a week was recorded positive for IGD (+3.3%), followed by Brioschi (+2.5%) and Aedes (+1%). The worst performances, on the other hand, are those of Abitare In (-3.7%). Risanamento (-2.1%) and Next Re (-0.6%) also did poorly. Gabetti moved little.
Macroeconomic data
Few macroeconomic indications on the real estate front arrived this week. The most important was in the United Stateswhere the have increased mortgage applications in the last week (as of September 6). In particular, the index measuring the volume of mortgage applications recorded an increase of 1.4%, that relating to refinancing requests rose by 0.9% and that relating to new applications recorded an increase of 1.8%. The basis of the positive data, as indicated by the Mortgage Bankers Associations (MBA), is the fact that the rates on 30-year mortgages have fallen to 6.29% from the previous 6.43%.
Sector studies
In the last few days, several interesting researches on the sector have been published. After closing the first quarter of 2024 with a decrease of -7.2%, theThe expected turnaround in the residential market came in the second quarter of 2024. According to the analysis by Abitare Co. based on data from the Real Estate Market Observatory (OMI) of the Revenue Agency, in the second quarter of this year the residential real estate market at a national level grew by +1.2% compared to the same period last year, with 186,324 sales. Among the main metropolitan cities, in the second quarter of 2024 the increases were recorded in Genoa (+3.9% and 2,335 transactions), Rome (+3.4% and 9,456 transactions) and, albeit slightly, in Palermo (+0.7% and 1,726 transactions). On the other hand, they decreased in Florence (-8.1% and 1,225 transactions), Milan (-7.3% and 6,087 transactions), Bologna (-2.5% and 1,504 transactions), Turin (-2.0% and 3,886 transactions) and Naples (-0.9% and 2,154 transactions).
Broadening the view, there are those who have declared that “European real estate returns to speaking Italian, in a climate of growing optimism“. In fact, our country will be the leader in the EU area in market growth in the two-year period 2024-2025, with a real estate turnover that will increase by 3.4 percent by the end of this year and by 5.7 percent next year, according to the European Outlook 2025 presented by Scenari Immobiliari. In terms of residential sales, 720 thousand are expected in 2024, while around 760 thousand exchanges are expected in 2025: an increase of 36 percent compared to 2020. Over ninety percent of sales involve old homes and this pushes prices upwards for new homes or in any case better quality ones, which do not require redevelopment work. In terms of sales prices, a growth of 3.1 percent is expected at a national level, but in the large cities the variations will be more significant, with Milan leading the ranking of the top 10 cities with a +6.9 percent, ahead of Venice with a +6.5 percent and Rome with a +6 percent.
