The housing market in 2024: What to expect for prices and rents

Optimistic forecasts

2023:
Although figures for last year are not yet available, a significant drop in buying and selling is estimated, largely attributed to the decrease in mortgages, which fell by 29% according to September 2023 statistics reported by Corriere della Sera. Some estimates point to a further drop in buying and selling in 2023, around 5%.

The Estimates:
Predicting the 2024 landscape is difficult, but some figures can be considered with some certainty. Interest rates are expected to fall over the course of the year, but this may not be enough to offset the drop in sales.

Banks' Prudence:
Banks are expected to take a very strict approach to potential borrowers, showing particular distrust towards those applying for mortgages without guaranteed income. However, the situation is not expected to reach the levels of the 2012 mortgage crisis in Italy.

Prices:
As far as market prices are concerned, growth is expected to be limited, with an expected increase of 0.6% in Milan and 1.4% in Rome in 2024. Little significant change is also expected in 2025 and 2026, which may not even compensate for inflation.

More Short Rents:
Falling rates could lead to an increase in investment purchases. Traditional rentals could be replaced by short rentals or contracts with students and workers, where there is a more stable demand.

The Dry Rate Factor:
Despite the increase of the cedolare secca to 26%, short rentals are expected to persist, especially in tourist locations. Stricter regulations could incentivise the return of houses to the traditional rental market.

What will happen to Long Term Rentals:
In spite of the dry coupon, it is unlikely that rents for long-term contracts will increase, especially in cities where prices have reached unaffordable levels.

The Trend of Houses in Tourist Resorts:
In 2023, the market for homes in tourist resorts showed signs of vitality thanks to increased demand from foreigners and purchases without the aid of mortgages.

What will happen in 2024:
Investment is expected to continue to drive the housing market, with many people buying to use the home temporarily and rent it out the rest of the year, especially in tourist locations. However, prices remain affordable as the market has not yet recovered the nominal values of 2012, except in the most exclusive locations.


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