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Residential property sales up 18.9% in 2016 with purchases totalling €89 bn

by Giovanni Parente

The crisis seems to really be behind us. Sales of homes in 2016 registered a much more decisive increase compared to the first recoveries seen in 2015 and 2014. Last year 533,741 apartments and houses changed hands in the residential market. In percentage terms, that was an increase of 18.9% compared to the previous 12 months, while the value of sales rose from €76 billion to €89 billion (+17.4%).

These are the numbers in the 2017 report on the residential sector by the Italian Revenue Agency’s observatory on the real estate market, in collaboration with Italian banking association ABI, presented yesterday in Rome.

A two speed recovery in terms of geography. The boost in transactions in the residential market is stronger in the central-northern areas, with Veneto leading growth (+23.1%), followed by Lombardy (+21.4%). Meanwhile growth is running at slower rates in the southern regions of the peninsula, particularly in Calabria (+10.8%) and Molise (+7.8%).

Behind the liveliness in the residential market, there is also an increase in the recourse to and concession of bank financing. Purchases of homes “supported” by a mortgage amounted to 246,182, rising 27.3% compared to the 193,350 in 2015.

The average capital supplied is around €120,000. Also in this case, the scenario is different across the country. While a decline was recorded in the South and the islands (almost €3,000 less), in the North the average capital supplied grew by €1,600. In the center of the country, the increase is in line with the national figure (+€400 compared to 2015). It is in the cities of the central regions where the maximum is recorded at €153,000.

Regarding mortgages, the study notes a further decline in the average interest rate, which fell to 2.31%, a softening of 0.44 percentage points compared to the previous year. The average duration of a mortgage is 22.5 years. The average monthly rate shifted from €592 to €570.

The affordability index – calculated by ABI’s research institute which brings together the factors (income, house prices, interest rates on mortgages) related to the possibilities for families to buy houses by going into debt, reached a historic peak in the second half of 2016 and in March 2017 it stabilized around the levels of the end of last year.