Real estate market trend 2020

The Fimaa (Italian Federation of Business Agents Mediators) recently discussed the real estate market trend and of how industry professionals dealt with the agency closure period because of theCoronavirus emergency.

The live Facebook meeting was attended by Santino Taverna, national president of Fimaa-Confcommercio, Oscar Caironi, president of Fimaa Ascom Confcommercio Bergamo, and Luca Dondi, CEO of Nomisma.

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 The effects of lockdown and social distancing

And the CEO of Nomisma himself underlined what the real estate market trend emerged in recent weeks, explaining that 'a further worsening scenario' had to be added. In this regard, Dondi explained: 'In the forecasts made last month, we perhaps erred in optimism by imagining not a return to normality, but an attenuation of some measures a little earlier than what will actually happen. So we added a further negative dimension and transformed what was the pessimistic scenario twenty days ago into the basic scenario. This is because the phenomenon of lockdown and social distancing that is characterizing these weeks will inevitably be reflected in a recession, in a worsening of general economic conditions which will have a significant effect on the market. The CEO of Nomisma then stated: 'The paradox is that we are running away from a huge enemy, but the risk is that we then find ourselves having to face an even bigger enemy which is represented by the recession and the economic difficulties that this situation of prolonged inactivity will inevitably bring. I believe it is absolutely the time to think also from a prospective perspective in terms of easing some measures precisely by looking at the economic consequences that prolonged inactivity can cause'.

 Sales and price trends

Turning the spotlight on the sector, Dondi illustrated the forecasts relating to the trend of sales and prices, confirming the very significant decline in sales. A significant decline which 'does not depend exclusively on the inactivity of these two months, but it depends above all on the economic consequences on family budgets di questa inattività e della parziale attività dei prossimi mesi'. According to what was stated by the CEO of Nomisma, given the significant decline in sales 'there will be substantial stability in prices, at least in the initial stages'. And Dondi explained why by saying: 'What previous crises, especially that of 2008, have taught is that in Italy prices react with a delay, very slowly, compared to the evolution of contexts. This is an element, if we want, of safeguarding financial solidity. At the same time it is also an element of penalization of the market. So it will be necessary to understand what the prevailing effect will be, above all what will be the need to monetize that some families will have precisely to ensure they maintain their standard of living. But what we see today is an immediate, drastic effect of much lower levels of activity as regards the price component.'

The rental market

The CEO of Nomisma also addressed the rental theme, pointing out that 'rental is a controversial segment'. As regards short-term rentals, Dondi highlighted the fact that there will be a 'natural shift' towards other solutions, there will be a repositioning on other segments of the market. Then speaking about the traditional rental market, the CEO of Nomisma has highlighted the importance of the student component. On this front there is a problem to take into consideration: if we were to continue with the distance learning, the student component could suffer a contraction. Dondi therefore believes that there may be 'a search towards medium-term rental forms, which however will not be able to respond to all the offers that will pour into this market', and therefore imagines 'some greater inflection on rents in the rental segment'. According to Dondi, 'it will then be necessary to understand whether families who cannot access the property, either because they do not have the resources or because they want to understand the evolution of their income situation, will wish to temporarily transition, as happened between 2010 and 2012, to the rental segment. This could be an element that gives some relief in terms of profitability to the residential rental offer. For the CEO of Nomisma it is therefore 'a fairly controversial market, in which there will be a series of repositionings'.

 Fimaa's requests for the sector

Opening the meeting, Santino Taverna, national president of Fimaa (Italian Federation of Business Agents Mediators), illustrated the observations made in the conversion phases of the decrees issued by the government. Taverna underlined that Fimaa, with Confcommercio, 'has asked to intervene in the moratorium on tax deadlines to make it broader and more inclusive; asked to immediately make the measures adopted to guarantee liquidity for businesses operational avoiding bureaucratic constraints; he asked about also take local taxes into account, how Imu And Tasi, and other taxes that do not fall within the current suspension provisions; asked that in the 60% tax credit provided for i rental fees for shops and workshops also include office rentals; he also asked reintroduction of the flat rate tax, not only for commercial properties, but also for those for tertiary use, providing not only for newly signed rental contracts but also for existing ones. Il presidente di Fimaa ha poi aggiunto: 'Abbiamo veicolato istanze anche nel merito delle locazioni turistiche, che come altri settori sono fortemente penalizzate in questa fase di emergenza sanitaria. Work is also being done to allow the resumption of the activity of real estate operators, as well as that of merchandise and credit operators, obviously in compliance with the regulations issued to avoid infections.

 Pay attention to the house

The observation of Oscar Caironi, president of Fimaa Ascom Confcommercio Bergamo, was interesting, as he highlighted how in this period of lockdown theimportance of the house. In this regard, Caironi underlined: 'We have seen that it is a place that protects us, that gives us security. Those who are lucky enough to have a garden or terrace have had the opportunity to enjoy it better.' According to Caironi, 'there will definitely be a return to a type of 80s real estate, which will have large spaces, including large outdoor spaces'.

The desire for home remains. According to the national president of Fimaa 'beyond this emergency, which currently prevents operations, I think that the real estate sector will continue to be attractive and will certainly be able to recover. The effects of the coronavirus will not reduce the interest or need to think about purchasing a home. On the contrary, it will also likely amplify the need to replace it'. Taverna said: 'There could certainly be one contraction regarding the number of sales. And in any case, any decline will never be comparable to stock market or financial market fluctuations. I believe that even for those who rent there will be some considerations towards purchasing a house: the same amount of a rental fee can now be capitalized into a mortgage installment for the purchase, given that current interest rates have never been so convenient. Nor should we forget the fact that we operate in a country which in terms of morphology, climate, food and entrepreneurial ability has nothing to envy of others, as well as boasting 70% of the world's artistic heritage.'