The S&P report sees Italy among the hardest hit countries, but the decline is contained.
What does this mean for the European real estate market? According to S&P, the drop in transactions during the lockdown will only show its effects in a few months. In the meantime, the buying and selling activities will also be weak due to the drop in employment, and therefore in disposable income, due to the pandemic, which will cause the postponement of many purchase decisions.
However, analysts do not expect a collapse in real estate prices in Europe: it will be prevented by the income support measures put in place by governments, which will ensure that activities can limit the number of layoffs.
The impact of coronavirus on European real estate markets will be that of a drop in house prices. However, according to S&P Global, by 2022 everything should return to pre-pandemic levels thanks to economic policies.
According to the report “Government Job Support Will Stem European Housing Market Price Falls”, Europe will face the deepest long-term recession this year. But in the same way, the recovery expected for 2021, albeit more gradual, will be faster than what normally follows a recession in an economic cycle. It is also much stronger than the last recovery, following the 2008 financial crisis.
For the past two and a half months we have been forced to stay at home and many Italians have also had to fall back on smart work, with all the pros and cons of the case. More flexible hours and the convenience of not having to travel to work, of course, but also the need to carve out a corner where you can work even in very small apartments that weren’t equipped for such situation. Our relationship with housing has therefore changed, but can the same be said for the search for new housing? According to Carlo Giordano, CEO of Immobiliare.it, in fact not.
In an interview with Il Foglio, Giordano explained how the traffic data on the platform is clear: Italians dream of terraces and spacious apartments, but often fall back on the two-room apartment to find more affordable prices. More than the pandemic, the market will therefore undergo further changes due to economic uncertainty: those who have had an activity that had to remain closed for a long time often did not want to take out a mortgage and, in any case, the banks may not have given it to him. In short, people will not leave the city, as was assumed at the start of the emergency, but many properties are intended to remain unsold.
The solutions proposed by Giordano are different. First of all, an appeal to the State to guarantee 100% mortgages, in particular favoring young couples looking for permanent accommodation. In this way, there would be new buyers, the state would win on taxes and the banks would feel more protected and could open new positions.
In addition, it is time to review the offer. It makes no sense to build certified green buildings, very few are those who can afford it. It is better to focus on the energy efficiency of those that already exist, or on the reconstruction of buildings that are no longer usable, such as apartment buildings, but also schools and other public services. It would also avoid consuming new urban land. Finally, it would be a good idea to transform four-room apartments and oversized apartments into two or three-room apartments, solutions much more in demand by families today, who do not plan to have a lot of children.