Between April and June 2024, the Italian real estate market recorded an increase in sales and positive dynamics for rentals, especially for subsidized contracts and those aimed at students.
According to the Real Estate Market Observatory of the Revenue Agency, the volume of trade increased by 1.2% compared to the same period in 2023, with a significant increase in the share of home purchases via mortgage, favored by the drop in interest rates.
But what are the factors that have influenced this recovery and how do the dynamics differ in the various areas of the country?
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Increase in sales and falling interest rates
In the second quarter of 2024, approximately 186,000 house saleswith an increase of 2,000 units compared to the same period in 2023. This result is largely attributable to the strong growth in the month of April, which saw an increase of 7% compared to the previous year.
The areas of Northern and Central Italy, which represent 70% of the market, showed the strongest performances, with an increase of 1.7% and 1.1% respectively. In the South and the Islands, the increase was more contained, less than 1%.
The use of mortgages contributed significantly to the increase in sales. 41% of purchases were financed by mortgages, a figure that increased compared to the previous quarter, also thanks to the reduction in average initial interest rates, which fell to 3.7%.
This 28 basis point decline from 3.98% in the previous quarter has made home purchases more accessible for many Italian families.
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House Size and Territorial Differences
In the second quarter of 2024, the average surface area of purchased homes stands at approximately 106 square meters at the national level. However, significant differences can be observed between the various areas of the country. In the North East, the homes purchased are generally larger, with an average surface area of 114 square meters, while in the large provincial capital cities the average size of the homes purchased is smaller, at around 98 square meters.
Smaller municipalities stand out for a more marked growth in the real estate market, with an increase in trade of 1.6%, and here too the homes purchased are larger, with an average of 109 square meters.
On the contrary, in the main cities the increase in sales is more modest, only 0.2%.
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Decrease in sales of new buildings and increase in purchases of existing homes
The second quarter of 2024 saw a significant reduction in sales of newly built homes, which accounted for only 6.4% of total trade. This figure marks a 15% decrease compared to the same period in 2023, when the share of new construction was 8.1%. In contrast, sales of existing homes increased by 2.5%, reflecting greater demand for this type of property.
In terms of type of purchase, a full 71% of homes purchased in the quarter were intended to be the first home for Italian families, a trend that highlights the importance of the tax breaks associated with this type of purchase.
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Rental market trend
In the rental sector, between April and June 2024, there was an overall decline in rented homes, with a decrease of 2.7% compared to the same period in 2023. Long-term rentals decreased by 5.5%, with peaks close to -6% in areas with high housing tension. However, the segment of transitory contracts, with a duration between 1 and 3 years, saw a slight growth of 1.3%.
The increase in subsidized rents for students is significant, with a 4.5% increase for fully rented homes. The figure is even more significant if we consider partial rentals (for example shared rooms), which have reached a 25.7% increase.
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Changes in large cities: Rome growing, Milan decreasing
Home sales in major Italian cities showed mixed trends in the second quarter of 2024. Rome recorded the highest number of sales, with almost 9,500 transactions, representing 33% of the large-city market and marking a growth of 3.4%. Milan, on the other hand, suffered a decline of 7.3%, with just over 6,000 sales, while Florence recorded an even more significant contraction, exceeding 8%.
Rome also stands out for its widespread use of mortgages: almost 50% of sales by individuals were financed with a mortgage, and 83% of purchases were for the purchase of a first home, taking advantage of tax breaks.
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Rental contracts: opposite situations in Rome and Milan
In the second quarter of 2024, the rental market showed opposite dynamics in the two main Italian cities. In Rome, there was a marked decrease in new residential rental contracts, with a decline of 9.1%. In particular, ordinary transitory contracts suffered a significant reduction, close to 20%, followed by contracts with agreed rent, which decreased by approximately 12%.
The only positive sign in Rome concerns the homes rented in portions with subsidized rent for students, which have registered an increase of more than 26%.
In Milan, however, the rental market grew in almost all segments, with the exception of new long-term ordinary contracts, which recorded a decrease of 5.6%. This decrease was largely offset by the increase in other market segments.
