Experts estimate a 5% drop over the next two years
“Limited impact compared to Italy.
Mortgage unknown Stake sales, but few waivers for new housing ”

Less than 5% between now and 2022. This drop in house prices will be in Milan, but limited in size, and in any case much smaller than that of the other major Italian cities. The estimate is from the Bolognese research institute Nomisma which also on non-residential properties provides a reduced impact on prices compared to what will be recorded in the rest of the country. Another important study center, Scenari immobiliari, limits its survey to 2020 but reports stable prices for the Lombard metropolis.

Of course, sales will decrease a lot: the first estimates at national level say that the transfers of ownership concluded between March and April are almost 80% less than in 2018 and it is unthinkable that with the gradual recovery of activities the gap can be bridged. Both Nomisma and Scenari see an annual balance down by around 25%.

But how is it possible that in the face of a sharp drop in sales, prices can resist?

The first reason is in the feeling (or hope) that in a few months the economic crisis will be mitigated and those who want to sell a house if they do not need to monetize will prefer to resist or at best give a limited discount before deciding to sell also because there is no way of investing the proceeds of the sale both safely and profitably. At the time of the 2012 crisis, which also led to the collapse of sales and quotations in the Lombard capital, ten-year government bonds yielded over 6%, today they are 1.5%.

In particular, it is not to be expected that the prices of new homes will drop. Part of the construction sites opened in the city, even before Covid’s arrival, had sold almost all the accommodation on paper. Furthermore, as explained by Vincenzo Albanese, president of the real estate agents of Fimaa in Milan and Monza, “compared to 2012 we have an interesting phenomenon: on the houses under construction, for which negotiations had already been started, very few, less than 10%, waivers from potential buyers. Eight years ago there was a generalized escape. ” According to Albanese, not only the new but also the high level second-hand products should not be affected by the crisis. “Two months of forced stay in our homes have taught us what the defects of the homes we live in are and surely those who want to change will remember when it comes to choosing.”

Another aspect that should shelter Milan is the fact that the use of mortgages in the city is certainly widespread but less than in the rest of the country. The biggest unknown factor on the brick market is whether banks will continue to make mortgage credit and with what criteria. “In the Lombard capital – the president of Scenari Immobiliari Mario Breglia estimates – only 20% of the purchases are for the first house, 60% is for housing improvements and 20% for investment”. Anyone who buys a home to set up a new family or to no longer stay in rent usually pays for a very significant loan (70-80%) and obtaining credit could be difficult. But those who buy to improve, adding the proceeds of the sale to the savings often need a smaller share of financing and those who buy for investment usually turn on the mortgage only if the rates are very low, as today, for a reduced share.

13th May 2020
by Gino Pagliuca
Corriere della sera
Milano L’Economia