In the second half of 2023, the moderate growth in residential property prices continued in Italy, in contrast with the decreasing trend in Eurozone countries. This is stated in the latest report on Financial Stability by Bank of Italy, according to which growth will slow down during 2024, and then stop in 2025.
House prices, decline in Europe, moderate growth in Italy
House prices in the second half of 2023 continued to decline, although they stabilized at the levels of the first half of the year. In the commercial sector, prices fell again in the main countries of the area. In contrast, in our country, in the same period the moderate growth in the values of residential properties continued and sales began to expand again.
For the first time in two years, in real terms, at the end of 2023, it was registered a positive annual variation. According to the agents interviewed during the Bank of Italy’s economic surveys, the high costs of mortgages have slowed down purchases.
According to estimates, the growth of Housing prices would slow during 2024 and come to a halt in 2025 . Considering long-term trends, the indicators that allow us to evaluate the dynamics of the residential market continue to do not highlight risks of overvaluation.
In the non-residential sector land sales began to increase again in the second half of 2023; in the same period the decline in prices attenuated
Mortgage rates are stable
As regards rates for the purchase of homes, growth was recorded until the third quarter of 2023, followed by a period of stability (at 3.1 percent in February 2024, from 2.3 in December 2022 ). At the end of 2023, the cost of financing for the purchase of a homei has stabilized at 5% for mortgages at a variable rate, while for fixed rate mortgages it decreased (to 3.6 percent, from 4.0 percent last September).
In line with the widening of this differential, in 2023 over 60 percent of the mortgages granted were at a fixed rate (49.6 percent in the euro area), confirming the propensity of Italian families to choose the type of loan that guarantees lower initial installments
I variable rate mortgages have deteriorated slightly more marked and during 2023 the share of families with at least one late installment increased slightly, although it remained lower than the average of the last ten years. According to the projections of the Bank of Italy’s microsimulation model5, during 2024 the share of financially fragile households would remain stable at 2.2 percent.