Because here the houses cost less-proiezionidiborsa.it
The real estate market in Italy seems to be experiencing a new youth. Home prices have started to race again after the pandemic, but not all. In particular areas, houses cost less. How long will the brick run last? Let’s find out what drives prices and if this blaze can last.
After years of stagnation, the Italian real estate market seems to have recovered. After the pandemic the house sales have recovered and prices have returned to run, though not for all properties. Above all, there are 2 factors that are pushing up the values of the houses, but only new ones and that they are in large urban centres. The reason is related to inflation and to large monetary liquidity of Italian families.
Which houses are going up in price and why
Last year’s demand is focusing on new homes in large urban centres. ISTAT data photograph a two-sided real estate market. Today i new prices are more than 15% higher compared to 2010. Instead i existing house prices are on average 15% lower compared to 2010 prices.
Demand and inflation push the price of new into a vicious mechanism. In fact, inflation drives up the cost of raw materials and therefore raises the final value of the new property. The increase in the cost of living induces those who have the willingness to invest in brickrather than on financial investment instruments such as government bonds. The goal is protect capital in the hope that the value of the house will increase. Whoever invests, bets on the new and on homes in large urban centresbecause here the strong demand makes them easier to rent.
Those who invest focus on the new and on homes in large urban centres-proiezionidiborsa.it
Because here the houses cost less and the used ones do not increase in value
Moving away from large urban centres, especially in the North, the value of real estate decreases because the demand for housing is lower. That’s why houses are cheaper here. The new value in small towns or in areas away from urban centers, it is lower.
The ten-year trend in property prices photographed by ISTAT shows us a clear optical illusion. In the last 10 years the prices of used properties have not increased in value. The prices of a used property today are almost 15% lower than they were 12 years ago. So whoever buys the new one today risks not getting the same money back in 10 years.
House prices in the coming months could also fall for another reason
L’inflation and the increase of interest ratesI am two time bombs for the real estate market. Mortgage interest rates have literally exploded since a year ago. The Bank of Italy has calculated that in October the average APR of mortgages was 3.2%, in September it was 2.6%. Today the best fixed-rate mortgages have an APR of around 3.1%. Instead, some adjustable rate mortgages have an APR of just under 3.0%.
Inflation and rising interest rates-proiezionidiborsa.it
The rate hike on mortgages could be discourage many homebuyers. According to Nomisma, in 2022 the total disbursements of mortgage loans will be around 47 billion against 53.4 billion last year. The decline could also continue in 2023. With the inevitable negative repercussions on market performance of used.
