cycles and evolution of real estate market in italy
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Cycles and evolution of real estate market in ItalyTRANSCRIPT
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Cycles and Evolution of Real Estate Market in Italy
Cicli e andamento del mercato immobiliare
Alberto M. Lunghini Reddys Group
March 2015
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Cycles and Evolution of Real Estate Market in Italy2
Consumer Price Index (CPI) and Residential Property Price Index in Italy
Consumer Price Index (CPI) and Residential Property Price Index in Italy
4.000
5.000
6.000 (1963 - 2014, index 1969=100)
[email protected] - Alberto M. LunghiniSource: data processing by Reddys Group on data Istat, Reddys Group
0
1.000
2.000
3.000
68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18
CPI Residential Property Price Index
forecast
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Cycles and Evolution of Real Estate Market in Italy3
Residential property price index andaverage Italian employee purchasing power index in Italy
(1963 - 2014, both in real term, index 100=1963)
Residential property price index andaverage Italian employee purchasing power index in Italy
(1963 - 2014, both in real term, index 100=1963)
200
250
300
[email protected] - Alberto M. LunghiniSource: data processing by Reddys Group on data ISTAT, Reddys Group
0
50
100
150
63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
Residential property prices Employee purchasing power
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Cycles and Evolution of Real Estate Market in Italy4
Residential property price cycles in Italy(1968 - 2014) excluding inflation and variation in purchasing power
of middle class Italian employees (real prices, index 1968=100)
Residential property price cycles in Italy(1968 - 2014) excluding inflation and variation in purchasing power
of middle class Italian employees (real prices, index 1968=100)
140
160
180
[email protected] - Alberto M. LunghiniSource: data processing by Reddys Group on data Istat, Reddys Group
60
80
100
120
68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
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Cycles and Evolution of Real Estate Market in Italy5
1968 421,000
1969 451,000
1970 526,000
1971 486,000
1972 536,000
1973 401,000
1974 421,000
1975 341,000
1976 466,000
1991 558,000
1992 467,000
1993 503,000
1994 497,000
1995 504,000
1996 483,000
1997 525,000
1998 578,000
1999 642,000
2000 690,476
Residential property transactions in Italy1968 - 2014
Residential property transactions in Italy1968 - 2014
[email protected] - Alberto M. LunghiniSource: data processing by Reddys Group on data Censis, Agenzia delle Entrate
1976 466,000
1977 446,000
1978 496,000
1979 552,000
1980 617,000
1981 592,000
1982 431,000
1983 391,000
1984 366,000
1985 430,000
1986 464.000
1987 464,000
1988 494,000
1989 476,000
1990 519,000
1999 642,000
2000 690,476
2001 681,266
2002 761,520
2003 762,086
2004 804,126
2005 833,350
2006 845,051
2007 809,177
2008 686,587
2009 609,145
2010 611,878
2011 598,224
2012 444,018
2013 403,124
2014 417,524
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Cycles and Evolution of Real Estate Market in Italy6
Residential property transactions in Italy1968 - 2014
Residential property transactions in Italy1968 - 2014
700.000
800.000
900.000
[email protected] - Alberto M. LunghiniSource: data processing by Reddys Group on data Censis, Agenzia delle Entrate
300.000
400.000
500.000
600.000
68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
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Cycles and Evolution of Real Estate Market in Italy7
Honeycomb cycleTheoretical representation
(Real Estate Market)Honeycomb cycle
Theoretical representation (Real Estate Market)
Prices
[email protected] - Alberto M. Lunghini
Source: Research (1994) of NVM and Universities Amsterdam and NijmegenTransactions
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Cycles and Evolution of Real Estate Market in Italy8
Honeycomb cycle (Residential properties in Italy)
Honeycomb cycle (Residential properties in Italy)
9192 03
04
05
06
070809
1011
12
13240250
260
270
280
290
300
310
320
Real residential property prices
[email protected] - Alberto M. LunghiniSource: data processing by Reddys Group on data Censis, Agenzia delle Entrate
75 7677
78
79
8081
82
83
84 85 86
87
88
89
90
93
94
95
9697 98 99 2000
01 02
13
14
100
110
120
130
140
150
160
170
180
190
200
210
220
230
240
80 100 120 140 160 180 200 220
Transactions Index 1968=100
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Cycles and Evolution of Real Estate Market in Italy9
Consumer Price Index (CPI) and Residential Property Price Index in Italy
(index 1961=1)
Consumer Price Index (CPI) and Residential Property Price Index in Italy
(index 1961=1)
1961 1.0 1.01971 1.6 1.5 + 6.71981 13.0 6.4 + 103.11991 41.6 14.4 + 188.91992 44.8 15.2 + 194.72001 45.8 19.9 + 130.22002 51.5 20.3 + 153.7
Residential property price index CPI %(a) (b) (c = )a - b b
[email protected] - Alberto M. Lunghini
2002 51.5 20.3 + 153.72003 59.9 20.9 +186.62004 65.4 21.3 + 207.02005 71.1 21.7 + 228.32006 75.2 22.1 + 240.22007 79.2 22.5 + 252.52008 80.9 23.2 + 248.52009 79.3 23.4 + 239.72010 77.9 23.7 + 228.52011 76.8 24.2 +215.12012 73.4 25.1 +192.32013 69.7 25.4 +174.32014 67.6 25.5 +165.2N.B. Annual average variation of residential property prices was equal to 8.3% during last 53 years (1961-2014).
Annual average variation of CPI was equal to 6.3% during last 53 year.Therefore annual differential compound increase was equal to 1.9% during last 53 year.
Source: data processing by Reddys Group on data Reddys Group
max
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Cycles and Evolution of Real Estate Market in Italy10
Nominal and real variations of residential property prices in Italy
Nominal and real variations of residential property prices in Italy
713%
500%
600%
700%
800%
[email protected] - Alberto M. LunghiniSource: data processing by Reddys Group on data Reddys Group
60%
220%
10%48%
7%
90%
42%
-20%
15%
-100%
0%
100%
200%
300%
400%
1961-1970 1971-1980 1981-1990 1991-2000 2001-2014
nominal real
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Cycles and Evolution of Real Estate Market in Italy11
GDP in Italy(1971 - 2014)
GDP in Italy(1971 - 2014)
3%
4%
5%
6%
7%
8%
[email protected] - Alberto M. LunghiniSource: data processing by Reddys Group on data Istat
-6%
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
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Cycles and Evolution of Real Estate Market in Italy12
14%
16%
18%
20%
22%
Inflation in ItalyInflation in Italy
[email protected] - Alberto M. Lunghini
-2%
0%
2%
4%
6%
8%
10%
12%
55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
Source: data processing by Reddys Group on data Istat
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Cycles and Evolution of Real Estate Market in Italy13
140
160
180
Residential property price cycles in Italy(1968 - 2014, forecast 2015 - 2026) excluding inflation and variation in purchasing power
of middle class Italian employees (real prices, index 1968=100)
Residential property price cycles in Italy(1968 - 2014, forecast 2015 - 2026) excluding inflation and variation in purchasing power
of middle class Italian employees (real prices, index 1968=100)
[email protected] - Alberto M. Lunghini
60
80
100
120
68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 265 5 6-7 8-9 7-9 10
Source: data processing by Reddys Group on data Istat, Reddys Group
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Cycles and Evolution of Real Estate Market in Italy14
Honeycomb cycle - forecast (Residential properties in Italy)
Honeycomb cycle - forecast (Residential properties in Italy)
9192
93
03
04
05
06
070809
1011
13240250
260
270
280
290
300
310
320
Real residential property prices
12
[email protected] - Alberto M. LunghiniSource: data processing by Reddys Group on data Censis, Agenzia delle Entrate * Forecast
75 7677
78
79
8081
82
83
84 85 86
87
88
89
90
93
94
95
9697 98 99 2000
0102
13
14
100
110
120
130
140
150
160
170
180
190
200
210
220
230
240
80 100 120 140 160 180 200 220
TransactionsIndex 1968=100
15*
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Cycles and Evolution of Real Estate Market in Italy15
Stock Price Percentage Total Return / Percentage Home Price
(Italy 1963-2013) real valueStock Price Percentage Total Return / Percentage Home Price
(Italy 1963-2013) real value
20
40
60
80
100
[email protected] - Alberto M. LunghiniSource: data processing by Reddys Group on data Mediobanca, Reddys Group
-100
-80
-60
-40
-20
0
20
63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13
Stock price percentage total return Percentage Home Price
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Cycles and Evolution of Real Estate Market in Italy16
S&P index: Percentage Total Return / Percentage Home Price
(US 1963-2014) real valueS&P index: Percentage Total Return / Percentage Home Price
(US 1963-2014) real value
10
20
30
40
[email protected] - Alberto M. LunghiniSource: data processing by Reddys Group on data Standard & Poors
-40
-30
-20
-10
0
63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
S&P index: Percentage Total Return Percentage Home Price