Italy Luxury Residential Real Estate Market - Growth, Trends, COVID-19 Impact, and Forecasts (2023 - 2028)

During the time frame of the forecast, the luxury residential real estate market in Italy is expected to register a CAGR of more than 5%.

Key Highlights

• COVID-19's impact was severe on the market. The house prices in the Mediterranean country decreased by 2.6 percent, with a potential decrease of up to 4 percent. Despite the pandemic crisis, luxury residential real estate in the country currently, is in the recovery phase, as sales in the country quickly bounced back to pre-pandemic levels.
• Italian magazines did a study that shows the demand for high-end homes has gone up by almost 50% since 2019. One of COVID-19's numerous legacies appeared to be upscale housing that fulfilled contemporary living requirements. In the last couple of years, the public's buying interests and choices have changed, and there has been a trend toward putting more emphasis on luxury living spaces.
• Residential is the biggest part of Italy's real estate market, making up more than half of all sales in 2020. Most Italians live in homes they own, and houses or apartments are seen as important and safe investments, so it shouldn't be a surprise that the luxury residential market is quite active.

Q1 2022 marked the start of the biggest urban regeneration project in Italy. It will host over 50,000 people every day, including residents, city users, and visitors, which will boost the luxury residential real estate market in the region. Also, Rome is back in the arena, and quarterly investment stood at 13% of the total, higher than 8% of the whole of 2021.

Italy Luxury Residential Real Estate Market Trends

Increase in Residential Properties across the Italy due to Less Mortgage Rates

The cost of getting a loan to buy a home also has an effect on the market for luxury residential real estate. Most Italians take out a mortgage to purchase a home, and mortgage debt accounts for about 70% of all household debts. As a result of the Federal Reserve's aggressive interest rate cuts and quantitative easing, Treasury yields went down, which lowered mortgage rates. Experts in the field say that the current housing boom is a result of a mix of low interest rates, high demand, and limited supply. It is a situation that many are feeling acutely about, with no single policy to blame and no easy fix.

Between the first quarter of 2018 and the second quarter of 2021, Italy's mortgage rates went down a lot. When compared to other European countries, Italy's interest rates are low and house prices are going down, which has brought back interest in the real estate market. Even though they haven't reached the levels they were at before the crisis, the number of transactions in the luxury residential real estate market and the number of mortgages given to buy homes show that the sector in Italy is on the upswing.

Milan has been able to attract more people and investments, both inside and outside of Italy, in recent years than in the past. This is because Milan is both the business and financial capital of Italy and a center for innovation. This ability to grow and try new things was also reflected in the luxury residential real estate market, which was the most active in the country. Since 2012, the number of luxury home sales and prices have gone up steadily. Some parts of the city are now among the most expensive places in the country to buy a home.

Demand For Housing Market To Remain Elevated

COVID-19 had a big effect on the luxury residential real estate market, but the housing market is still strong because more people are buying their own homes.Most of the demand in this sector comes from condominiums and apartments. Apartments are likely to dominate the sector when compared to condominiums. Because 64,000 apartment units will be completed in Q2 2021, which is more than condominiums.

The homeownership rate in Italy has been high since 2008, at about 70 percent. There were more than 140,000 housing units available to meet consumer demand in the fourth quarter of 2021, and owners and renters occupied more than 89% of them. Additionally, the majority of the country's older and middle-aged citizens contribute to the sector's sales. For instance, people aged 45 to 65 will account for more than 70% of homeownership rates in the country in the first four quarters of 2021. In addition, the growth rate of home ownership in 2021 remained resilient, despite a slight decline from the previous year due to changes in consumer behavior during the pandemic. In 2019, approximately 72.4 percent of Italians lived in an owner-occupied household.

Italy Luxury Residential Real Estate Industry Overview

Italy's high-end residential real estate market is competitive, with players from both inside and outside the country. The Italian luxury residential real estate market can be defined as a semi-consolidated market. Some of the top players in this market are Christie's International Real Estate, Immobilinvest Real Estate, Sotheby's International Realty, Chianti Estates SRL, and Carratelli Real Estate. The growing presence of international funds and foreign capital is increasingly attracting domestic developers to form joint ventures as a way of gaining a foothold in the country and enhancing their financial strength and management expertise.

Additional Benefits:

• The market estimate (ME) sheet in Excel format
• 3 months of analyst support

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