News
- 25.11.2011
NOMISMA III Realty Market Report 2011
On closer inspection, it clearly captures the speculative excesses inherent in the acceleration negative, mainly due to the fragility of the political framework and the lack of credibility of the ruling class. The analysis of the main macroeconomic returns, in fact, the image of a country in need, but shall not in any way to approach something much more compromised than ours, how the dynamics of credit markets seem.Italy has become the ideal target of an attack on the single currency, whose resilience is fostered through opportunistic certain that the main European partners have expressed in recent months. Our country is now paying the bill for ancestral folly, rather than the effects of cyclical trends which, as mentioned, do not seem so bad. The strong performance of exports, forcibly rigorous management of the deficit and only modest decline in private consumption, albeit at the expense of a sharp decline in the propensity to save and a concomitant acceleration of that debt, return a picture that does not seem justify the sudden distrust in recent months the financial markets.
If the evolution of key macro variables is an important lever Panic, a concern must be, rather, the increasing fragility of households and firms, which inevitably reflected the distancing international and leading to higher spreads. The social cost of holding power demonstrated in the prolonged recession in the context of a growing gap of wealth, was large and the prospect that might even expand, in the event of a prolonged market instability, it is dramatic.
The sharp rise in the cost of funding on the one hand, the strategy of self-defense in some ways inevitable put in place by lenders, on the other, deprive the demand for support has become essential in many cases. Accommodating the management of problem loans, especially those backed by mortgages, does, in fact, reflected the further tightening of the allocation criteria.
Self-selection of housing demand, due to the deferral of investment choices, it is associated, therefore, the choice for lightening the exposure to the banking sector that ends, inevitably, to penalize the liquidity of the market and, with it, guarantees of institutions which they are exposed. It may, thus, the entry into a vicious circle for recessive values of assets and transaction volumes, the duration of which could be anything but short. If there is no doubt that the cost of mortgages should be commensurate all'onerosità of funding and the actual risk, calculated according to changes of the previous payments and general economic outlook, it is equally clear that a closure will end up feeding the indiscriminate negative prospects who want to avoid.
With the materialisation of the double dip, already reported in July, seems to have slightly attenuated the resilience of prices, as can be seen from the table of half-year percentage changes of the last three years. It is an entity still inadequate, if placed in relation to the simultaneous reduction of earning capacity and household debt, as well as settlement activity, but which indicates unequivocally the ongoing downward pressure. It is difficult to imagine how long it takes for berthing at a sustainable level of values from which the market may finally start, but it is possible to identify some elements that can accelerate the transition, allowing the compressed demand, mainly represented by young nuclei and demand replacement, to access the housing market. The requirements for disposal of real estate portfolio, the expected increase in forced recovery procedures by banks against defaults (once shown the untenability of permanent moratoriums), as well as the gradual lessening of stiffness values on the part of is to manage inventory of new production, are the main factors contributing to the closure dell'ingente gap between availability and expectations. The persistence of today's imbalance has reflected relentless settlement activity, as evidenced by trends. The scenario that still seemed pessimistic over the summer has been confirmed in the real dynamics. The 575,165 residential trades expected by year-end level is the most low since 1997, when the level of financialisation of the market measured by the spread of loans relative to GDP, was significantly lower than the present (it has gone from 3% to 19.7%).
Just credit is, therefore, an indispensable support of the application in the transition to a new equilibrium. If the conditions in the context of hope and opportunity openings prevent indiscriminate selectivity aware of the systemic effects of a prolonged housing recession, it must be something more than a legitimate desire.
The supply component of the housing market is a key determinant to interpret trends and make predictions.
In the last decade (2000-2009) resulted in the building production growth rates progressively more sustained until 2007, then decreased to below the levels at start of period, in 2008-2009. In the last two years, new construction started on an annual average amounted to 36,409 residential buildings, for an overall development in terms of surface area of 23 million sqm / year and an average size of 634 square meters for building. In the same period a year are granted non-residential buildings 8,000, for a developing area of 13.4 million sqm / year and an average size of each building a little less than 1,700 sqm.
These numbers approximate the supply of new housing that is poured out on the market between 2010 and 2011.
The thirteen markets monitored by Nomisma represent approximately 30% of the land granted in Italy and have been hit by a delayed and less severe decline than the rest of the country.
In the past decade, the increase in the stock of housing, due largely to new construction, was significantly higher than the growth of households, which approximates the demand for new housing, so as to indicate that it is in the presence of an excess of supply that , beyond the economy, will find it hard to be absorbed by the market (the ratio between new homes and new families who, at the national level, is 1.7, in all the 13 major markets rose to almost 3).
The economic data reported in 2011 confirmed the trend to increase supply, which contrasts with the continuing drop in the demand.
These market dynamics have resulted in a further decline of trade, which amounts, according to our estimates, at year-end could be 6% for the residential component and 3.6% for that property for the company (offices, shops and laboratories and warehouses). The recent drop in transactions is part of a well-established trend that has produced a reduction of the quantity, due to the economic downturn, starting in 2007. In numerical terms, on average, each year realized a transaction volume of less than 23% and 30% for residential property for business, compared to the levels of activity for the period 2005-2007.
The logical consequence of the inevitable frailty is the further lengthening of the average time of sale and lease, arrived to settle at record levels in all areas. When compared with the time of sale recorded in late 2007, the elongation is a month and a half for a home of 2-2.5 months for offices and shops.
The continuation of the economic difficulties of the sector has led to revise the offer price strategies and with them the discounts on asking prices, which have recorded a reduction in growth for homes and offices and shops. This dichotomous behavior seems to depend on a different perception about the evolution of prices: in the residential segment, the offer seems to have finally taken note of a situation that remains unfavorable, opting for a quick adjustment in order to achieve the objectives realizable in the segments property for the enterprise continues, however, to prevail an attitude of greater initial greed that has led to an increase in the discount because of lower purchase prices.
No less problematic is the situation of corporate property. Already described the difficulties on the domestic front, is associated with the simultaneous capture of benefits from international investors, which have drastically reduced their operations in our country, oriented toward measuring widely prevalent in the retail sector.
The temporary removal of foreign operators who, on the contrary, in the pre-crisis had contributed to the growth of the sector, is involved in about 40% of investments, means that the market is now powered overwhelmingly by domestic component, mostly characterized by a low risk profile. The reduction in foreign operations can not, in any way, be fully compensated by an Italian real estate funds or other investment initiatives of local, has resulted in a net decrease of volume, about 60% ridottisi last four years.
The perceived riskiness of the environment has prompted investors to favor a lower volatility sectors such as services and commercial, in the first nine months of 2011 accounted for just under 90% of the procedures at the expense of the share of jobs in logistics sectors industrial and hospitality.
The radicalization of the negative trends has determined, on the one hand, a progressive compression of the first returns of the most sought after types and, second, the virtual absence of property used in operations, located in suburban contexts is not excellent infrastructure, for which the gap between expectations of supply and demand has expanded enormously.
The search for the most flattering prospects of profitability than those guaranteed by the major markets has led, on the one hand, with an emphasis on the territorial diversification of investment to secondary realities, on the other, to give priority to jobs in the retail sector. In the first nine months of 2011, the share of commercial investments have even reached 52%, an increase of 37% over the previous year.
To encourage the growth of the industry have contributed sottodotazione of retail space than the average of European countries and the resilience shown by the downturn in consumption, even if supported by a gradual erosion of the share of savings.
The profound transformation occurred in the investment choices is part of a picture of weakness and a wait, which involves both institutional and retail market. The increasing expectation of the need for a reformulation of prices depending on the profound changes that have affected the environment, penalizing strong levels of activity.
The prospect of a further modest decline, which stems from results of the econometric models do not represent, in all probability, the signal strength expected by the market.