A week of heavy losses for the real estate sector comes to an end with the attention of investors still turned to the central banks: the recent inflation data have helped the BoE to make the decision to cut rates by 25bps, even if inflation is expected to rise; there Norges Bank kept rates unchanged at 4.5%, while the Riksbank Swedish cut rates by 50 bp to 2.75%. Investors’ attention was more focused on the decision of Federal Reserve which cut interest rates again by 0.25 percentage points and analysts’ expectations are for another reduction in December. The move caused little reaction in the market because its precise size was also well-anticipated by investors. The president of the central institute, Jerome Powellhe said: “we are approaching neutral rates and therefore it may be appropriate to proceed more slowly with cuts”. The banker also commented that the result of the elections “will have no effects” on the Fed’s policy in the short term: Donald Trump obtained a clear victory in the American presidential elections, with a stronger mandate than in 2016. On the other side of the ocean, the weaker European economic outlook will not be helped by talk of US tariffs and could be the catalyst for further rate cuts by the ECBsay the experts.
The performance of the sector on the stock exchange
The real estate sector experienced a week of sharp declines in the Milanese market, while at a European level it limited the damage: the Stoxx 600 Real Estate index brought home a timid fractional gain. In Italy, the FTSE Italia All Share Real Estate index fell by more than 6 percentage points.
Real estate securities listed in Milan
Among the real estate companies listed on Piazza Affari, the decline was heavy for IGD (-7.5%) which announced its financial statements confirming its guidance for the entire year. Brioschi also slipped (-3.9%) followed by Gabetti (-2.8%). Well, however, Restoration and Living progressed by more than 2%.
Macroeconomic data
The usual numbers have arrived from the USA mortgage applicationswhich in the week to November 1st, showed a drop in requests by 10%. Mortgage applications in the United States are decreasing sharply. The index measuring the volume of mortgage loan applications recorded a decrease of 10.8%, after -0.1% in the previous week. The index relating to refinancing requests fell by 18.5%, while that relating to new applications fell by 5%. There Mortgage Bankers Associations (MBA), indicated that 30-year mortgage rates increased to 6.81% from 6.73% previously.
Sector studies
Data relating to the first half of 2024 show a residential market in good health, the Group notes Gabettiwith Italian families approaching the purchase of a home driven by greater confidence, partly motivated also by the consolidation of some economic fundamentals that Italy currently boasts and which distinguish it in the European panorama. The confidence climate index is increasing by 8% compared to October 2023, and by 2% compared to January 2024: both the economic one (+1% compared to the beginning of the year) and the personal one (+3% on beginning of the year). At GDP level, this first half of the year saw a slight increase of 0.3% in Q1 and 0.2% in Q2, confirming growth that has continued since the second half of 2020. Even on the employment front, the Italy is seeing ever-growing numbers, with the first half of the year reaching 143,305 employed, +2% on the same period in 2023 and a record for the last 10 years. The employment rate consequently increases and in this first half of the year improves by one percentage point compared to H1 2023 (62.1% versus 61.1%), while the unemployment rate falls, reaching 6.2%. , a percentage share not seen since the pre-2008 financial crisis period.
The analysis of the Group Research Office Tecnocasa still highlights a shortage of housing supply, in the first part of 2024: many properties were purchased immediately after the pandemic, new construction projects have slowed down due to uncertainty and the increase in raw material costs.
