A week ends marked by weakness for stocks in the real estate sector, listed on Piazza Affari, with central banks once again at the center of investors’ attention and the “hawkish” turn of the Federal Reserve.
Central banks divided
There ECBlast week, it cut the cost of money by 25 basis points, as expected by analysts, confirming that the Frankfurt bank’s monetary policy remains restrictive with a “data dependent” approach. On the other side of the ocean, however, in this octave, the Federal Reserve cut fed funds rates by 25 basis points to 4.25-4.50%, but reduced the number of cuts planned for 2025 to two as Chairman Jerome Powell said future easing would require further progress on inflation. The US economy, according to the latest GDP data, is expanding at a pace well above what Fed officials consider a non-inflationary growth rate. This has strengthened the central bank’s own position that it will be slow to cut interest rates further next year.
Monetary policy meeting also for Bank of Japan (BoJ) which decided to keep its reference rate unchanged at 0.25% for the third consecutive meeting. The BoJ had raised rates twice in early 2024, after nearly a decade of ultra-loose monetary policy. In recent months, Governor Kazuo Ueda has signaled that the central bank will raise rates further, although the timing of the move remains unclear. Even the Bank of England (BoE) kept rates unchanged at the last meeting of 2024. A widely expected choice, but in which one can read a “slightly dovish” stance, since three members of the Monetary Policy Committee voted in favor of a cut. Looking ahead, the BoE has indicated approximately two rate cuts planned for 2025, reflecting a cautious approach to future monetary policy adjustments.
The performance of the sector on the stock exchange
The real estate sector experienced a week of strong declines, in the Milanese market, with the index FTSE Italia All Share Real Estate which brings home a decrease of over 5 percentage points. Same fate for the sector, at a European level, which shows a decline in the index Stoxx 600 Real Estate by 4.3%.
Real estate securities listed in Milan
Among the real estate companies listed on Piazza Affari, the decline recorded by Remediation which slips by around 16%. They follow Next RE -7%, IGD -5.5%, Living IN -4.4%. Furthermore, down by 2%, Brioschi And Aedes. Gabetti limits the decline to 0.7%.
Macroeconomic data
The usual numbers have arrived from the USA mortgage applications which, in the week to 13 December, showed a decrease of 0.7%, after +5.4% in the previous week. The index relating to refinancing requests fell by 2.6%, while that relating to new applications increased by 1.4%. The Mortgage Bankers Associations (MBA) indicated that 30-year mortgage rates increased to 6.75% from 6.67% previously. The US Census Bureau provided an update on the construction market: licenses, in November, grew by 6.1% monthly, against the 0.4% decline in the final reading of October, also exceeding analysts’ expectations, while new construction recorded a further decline of 1, 8% monthly, still an improvement compared to the 3.2% decline in the final October reading. Positive signals have come from real estate market US: according to what was communicated by the National Association of Realtors (NAR), sales of existing homes in the United States recorded an increase on an annual basis of 6.1% in November, the largest growth since June 2021.
Sector studies
How many mortgages are there in Italy? Kìron Partner, a credit brokerage company of the Tecnocasa Group, has analyzed the Bank of Italy data relating to the mortgage stock granted over time to Italian families for the purchase of a home and still in progress. In the second quarter of 2024 the national figure stabilizes at 375.9 billion euros with a slight contraction equal to -0.16% compared to the first quarter of 2024. If the comparison were made on an annual basis (2nd quarter 2024 on 2nd quarter 2023) the active stock of mortgages to families for the purchase of a home would decrease by -0.30%. The level of active mortgages remains stable from 2022 with slight fluctuations around 375 billion.
According to what was detected by Istat, in the first quarter of 2024, after a substantially stable trend observed in the fourth quarter of 2023, the real estate transactions they resume the negative trend observed starting from the third quarter of 2022. The decline, explains the Institute of Statistics, is due to the housing sector, while the economic sector increases for the third consecutive quarter, albeit to a lesser extent in the first three months of 2024. Notary agreements for mortgages, loans and other mortgage-backed obligations continue to decline: in the first quarter of 2024 this occurs for the eighth consecutive quarter, although a slowdown in the decline is evident starting from the third quarter 2023. Istat also communicated that in the third quarter of 2024, the phase of growth in house priceswhich began in the same quarter five years ago. The greatest contribution to the trend dynamics of house prices is mainly due to new ones which increase by 8.8% on an annual basis, while the prices of existing houses show a relatively more contained growth (+2.8%). In the third quarter of 2024, the number of properties sold shows a new increase on a trend basis which accentuates the recovery that began last quarter.
