Coronavirus

Coronavirus, what are the consequences on house prices in Italy?

A cause of the spread of coronavirus now all over the world, S&P Global Ratings has revised its global growth estimates downwards: from the previous forecast of + 3.3% of GDP, now we are talking about a + 2.8%.
The real estate market has to deal with the spread of coronavirus, which, surprisingly, could dare to push the recovery of prices in Italy.

Of the series not all evil comes to harm, moreover, the current situation could also give it the boost to Italian real estate prices. For our country, S&P expects an increase of 0.5%, compared to 0.1% last year and after the drop in prices recorded in the two previous years. High economic accessibility and low financing costs will support demand in the most dynamic regions, with an increase in prices in aggregate terms.

The Italian real estate market, according to the S&P report, was signaled by a certain dynamism at the end of 2019, recording a positive trend in the third quarter of 2019 (+ 0.4%) for the first time since 2016. Interest rates it fell from 1.85% in May to 1.43% in November 2019, following a reduction in the government bond risk premium and a further easing of the ECB’s monetary policy.

This context was accompanied by a slackening of credit standards: in November, business loans increased by 49%, with an added increase in trade (600,000 in the third quarter of 2019, the highest value since 2011). The price trend reflects the economic gap in the country: the South has recorded a further contraction, while in the northern regions and in Milan prices have recovered in the last quarters.

Milan is outperforming the rest of the country, with a 5% annual increase in prices in December 2019. In aggregate terms, the demand for new conditions is increasing, with a positive increase in prices since the end of 2017. Prices in the second quarter, they increased by 1.3% compared to the same period of the previous year, with just + 0.1% for existing expenses, above all because new housing solutions almost reached historic lows.