Housing Markets in Italy after the crisis
Uberto Visconti di Massino
ERES 2010, June the 25th , 2010
Agenda
1. the Real Cycle and residential values
2. The PAST
3. The PRESENT
4. The FUTURE
5. The FUTURE 2: a great potential
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the Real Cycle and residential values
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Theory & practice
Values
(Sq.
Meters –
growthvolumes,
etc.)
Decreasing Demand growth Tendency
Demand
Trend
Conjuncture
Conjuncture
2
Stabilisation
Downturn
Recovery
OVERSUPPLY
Production
Demand / Production GAP
Complete market Cycle
1
Overall Trend
Over Supply
Expansion
3
Under Supply
(Prices - Sq.
Meters –
Increasing Demand
Built
volumes,
etc.)
Quantity
4
16
Time
17
16
Time
17
Graph 1.The hypothetical pattern of the real estate cycle and its main four phases.
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The PAST
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2005
2004
2003
2002
2001
2000
1999
1998
1997
III
1996
1995
1994
1993
1992
1991
1990
1989
1988
II
1987
1986
1985
Prezzi reali (deflazionati)
1984
1983
1982
1981
1980
1979
I
1978
1977
1976
1975
1974
1973
1972
1971
50
1970
1969
1968
1967
1966
1965
1964
1963
1962
1961
1960
1959
1958
Past cycles in Italy
Tendenza lineare di lungo periodo
500
350
200
VI
Source Scenari Immobiliari - Italy
6
400
real prices (no inflation)
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
Prezzi reali (deflazionati)
1984
1983
1982
1981
1980
1979
1978
1977
1976
1975
1974
1973
1972
1971
1970
1969
1968
50
19
5
19 8
5
19 9
6
19 0
6
19 1
6
19 2
6
19 3
6
19 4
6
19 5
6
19 6
6
19 7
6
19 8
6
19 9
7
19 0
7
19 1
7
19 2
7
19 3
7
19 4
7
19 5
7
19 6
7
19 7
7
19 8
7
19 9
8
19 0
8
19 1
8
19 2
8
19 3
8
19 4
8
19 5
8
19 6
8
19 7
8
19 8
8
19 9
9
19 0
9
19 1
9
19 2
9
19 3
9
19 4
9
19 5
9
19 6
9
19 7
9
19 8
9
20 9
0
20 0
0
20 1
0
20 2
0
20 3
0
20 4
0
20 5
0
20 6
20 07
0
20 8 °
0
20 9 *
1
20 0 *
1
20 1 *
1
20 2 *
13
*
1967
1966
1965
1964
1963
1962
1961
1960
1959
1958
What went wrong?
Tendenza lineare di lungo periodo
500
350
200
200
0
1,200,000
350
300
1,000,000
250
800,000
600,000
150
100
400,000
50
200,000
0
number of sales
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Residential cycle analysis, results
Res sales and Prices
a correlation
1,000,000
4,500
5 years
4,000
900,000
3,500
800,000
3,000
1
year
2,500
700,000
2,000
600,000
1,500
1,000
500,000
500
3 years
0
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
*
20
09
*
20
10
*
20
11
*
20
12
*
20
13
*
400,000
N° sales per annum
€/sqm average (S-I) + Working scenario
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(residential)
Overview of the past
(repeating itself?)
Synthesis of the last Cyclical downturns and the forecasted one
downtrn years
total price decline
Quarters
Years
Quarters
Years
real values
Nominal
real values
Nominal
-8.5%
Positive
12
3
0
0
Ist
1975 / 77
IInd
1983 / 86
-19.0%
Positive
16
4
0
0
IIIrd
1993 / 98
-29.4%
-10%
24
6
15
5
Average past
-18.9%
17
4
5
2
2008 / 11
-10.8%
20
5
12
3
IV
-3.4%
Table 1 – the residential cycles in the past 40 years, .
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A market going crazy….
The Honeycomb cycle
(Residential property in Lombardy)
Index of
Prices in constant Lira
300
t
290
280
270
$
2005
2004
92
260
91
250
2003
93
240
230
90
220
2002
94
210
200
95
89
190
99
98
96
82
180
2001
97
81
170
83
84
80
88
160
150
2000
86
85
140
130
87
75
Cpv
79
76
120
77
110
78
100
80
100
120
140
160
180
200
Index of N° of s ales trans actions
Source: data processing by Reddy’s Group spa on data Censis, Agenzia del Territorio - Servizio Statistiche Giudiziarie
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The PRESENT
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..... after 3 years
Overview of some current indicators
N° sales
►from 200 to 2007 province 67 to 72% / capitals 33 to 28%)
►The shift towards deurbanization was due to
 Moving out to buy a better, cheaper home
 New stock available outside, + gardens!
►2009: there had been 600k sales: - 15,6% national level (I
sem 2009 on I sem 2008)
…
of which – 12% on capital cities / -17% in province
►The “back to town” shift province to capitals due to
 Difficulties in commuting
 Lower periphery prices Vs province prices
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..... after 3 years
Overview of some current indicators
€ - prices
►from 2000 to 2007 prices increasing, then decreasing:
 National level: – 6,3% (2009/2008)
 End 2008 on I sem 2008: -3,6%
 I sem 2009 on II sem 2008: -2,7% (decline reducing?)
►Focus on cities:
 Milan and Florence better than average
 lower prices in cities due to inelasticity of new built (province)
►Peripheries versus city centers
 peripheries loosing more in value: lower quality homes
 Less immigrants demand for old homes (in peripher.)
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The FUTURE
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Overlook, a correlation
Italian GDP and constructons.
Euroconstruct onCresme et Al. - Dec 2008
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Real Estate and the Economy
2007
Financial crisis begins
(USA from housing mortgages)
2008
The Global recession begins
(hits Financial and Economic / w orld)
Upside scenario
Downside scenario
Base scenario
2009
End crisis/boost to economy (Equity
Investors emerge)
2009
End financial crisis
2010
Stable Economic conditions
(employment/spending increase)
2010
End of Global recession
2011
Grow th of Economies
(employment, spending increase)
2011
Stable Economic environment
(natural course of cycle)
(markets recover, still low “real” economy)
(employment and spending increase)
2009
Financial Crisis continues
(no positive drivers, externalities)
2010
Financial Crisis continues
(no positive drivers, externalities)
economy)
2011
End of Global recession (markets
recover, still low “real” economy)
spending increase)
2012
Stable Economic environment
(employment/ spending increase)
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The Italian market (residential)
Overview
► In general, Demand wise we can have three scenarios. The refer to the
economic forecasts :
► if UPSIDE, then ALL TARGETS (residential) will recover in 2010
► if BASE scenario: in 2010 we will have only the “NEED TO BUY” “NEED TO
RENT” ones active in the market, and in 2011 ALL TARGETS
► if DOWNTURN, we will have NEED TO BUY in 2011 and ALL TARGETS active
in 2012.
(NEED TO BUY= have savings and need more space, more rooms
(consolidated families whose children are growing) NO BUY: those who can
only rent (young couples, no children), professionals singles, senior couples
(still using their old home, empty nesters)
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The market cycle in the current setting : forecasts
DATA - Nov 08
2004
2005
2006
2007
2008°
2009*
2010*
2011*
2012*
2013*
NOMINAL Residential Values
Y.O.Y.
Y.o.y. 6,5%
index
5,2%
5,0%
4,4%
2,7%
-1,0%
-1,6%
-0,6%
1,2%
3,5%
REAL Residential Values Y.O.Y.
index
4,2%
3,4%
3,3%
2,5%
-0,7%
-3,0%
-3,5%
-2,5%
-0,5%
1,5%
Construction Costs indexY.O.Y.
4,2%
4,2%
3,4%
3,7%
2,8%
1,1%
0,9%
1,4%
2,7%
3,0%
C.P.I. Inflation
2,2%
2,0%
2,1%
1,8%
3,4%
2,0%
1,9%
1,9%
1,7%
2,0%
2010*
2011*
2012*
2013*
7,0%
6,0%
5,0%
4,0%
3,0%
2,0%
1,0%
0,0%
-1,0%
2004
2005
2006
2007
2008°
2009*
-2,0%
-3,0%
NOMINAL Residential Values Y.o.y. index
Construction Costs index
C.P.I. Inflation
Fonte: nostra elaborazione su fonti varie tra cui Scenari Immobiliari, Banca d’Italia.
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Whare are we now?
Table 1, Rents : popular (ERP, 1 e 2), sustainable (ERS, in the box, 3 -4), and “free” market
CASE STUDY
€/mq/anno
€/mq/mese
al netto delle spese
1
2
3
4
5
6
7
8
Abitazioni Popolari comune di Monza (Mz)
Abitazione ACER Emilia, tipologia ERP
caso Parma (E.r.s.)
Milano social housing (FHS)
Milano periferico
Co-Housing semicentro ("Residance")
Milano semicentro
Milano centro ristrutturato
5
15
40
70
110
120
160
200
IPOTESI
apt 100 mq
apt 60 mq
al mese
0,4
1,3
3,3
5,8
9,2
10,0
13,3
16,7
40
130
330
580
920
1.000
1.330
1.670
al mese
25
75
200
350
550
600
800
1.000
IPOTESI
rendimento
valore
lordo tasse
€/mq
3,50%
3,50%
3,50%
3,50%
3,50%
3,50%
1.100
2.000
3.100
3.400
4.600
5.700
Source: our calculatios on : ACER, Fondazione Cariplo, Co-Housing Venture, Scenari Immobiliari
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THE FUTURE 2
What next? “Sustainable” homes
(social housing – Edilizia Privata Sociale) in Italy
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A shift in the residential mindset
►From 100 B.C. to 1800
 Brick and mortars (the roman “insula” to the condo.)
►In 1900 the first revolution
 Electricity – hydraulics
►2006 – 2020 the second revolution
 Energy saving and sustainability
►In 2011 the third revolution
 The ethic side, management and common services.
 Institutional investors
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S.H.- What is it? Some cases
Social Housing 360° - arch. LAURA ROCCA
Fonte: RoccAtelier (www.roccatelier.it)
E.R.S. a Crema, Fondazione Cariplo, Fondo
Abitare Sociale - architetti D2U
Fonte: Jacopo della Fontana (www.d2u.it)
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S.H.- What is it? Some cases
Social Main Street –
Bicocca, Milano- arch.
DANTE BENINI
Fonte: studio Urbam – C.d.O.
Concorso Figino (Fond Cariplo) arch.
CINO ZUCCHI e Avventura Urbana
Fonte: www.avventuraurbana.it
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Some models to learn from : Social Housing in the Netherlands
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Social Housing in the Netherlands
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Social Housing in the Netherlands
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Social Housing in the Netherlands
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CONCLUSIONS
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GRAZIE - THANK YOU !
Uberto Visconti di Massino
Milano
Corso Italia, 17
20122 Milano
Tel. 02 00621170
Fax. 02 00621189
Roma
Via XX Settembre, 1
00187 Roma
Tel. 06 42020939
Fax. 06 42020951
www.epf.it
[email protected]
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