The residential property transaction performance index highlights a sudden slowdown in the Milan real estate market in the second half of 2023. The main drivers can be attributed to decreased demand compared to previous semesters, attributed to the increased difficulty for buyers in accessing credit. This is evident from the 3rd Real Estate Market Observatory 2023 by Nomisma regarding the real estate market in the Lombard capital.
In the first half of 2023, according to Nomisma, the residential market in Milan experienced a significant setback, with only 12,490 transactions compared to 15,600 in the first half of 2022 (-20%). This decline in transactions has partially affected the dynamics of prices for new and used properties, with a still present but significantly reduced growth compared to the previous semester. In the second half of 2023, prices for new and renovated homes experienced a slowdown (-0.6% on a semi-annual basis), despite an annual increase of +1.7%. The average discount percentage on the initial asking price (around 3-4%) remains stable, confirming a significant decrease compared to used properties. The sector of used properties shows a positive performance, with an increase in average prices of +1.3% on a semi-annual basis and +3.3% on an annual basis. The average selling times for used homes range from 3 to 4 months, maintaining an average discount of 8-9%.
These figures occur in a market context characterized by limited supply elasticity. Regarding rentals, the demand for rental homes in Milan continues to grow in the second half of 2023. Rental rates show a positive change (+2.9% on a semi-annual basis), with an annual increase of 4.7%. The average gross rental yield remains stable at 4.8%. On average, it takes about 2 months to complete a rental transaction, although properties with desirable features may remain on the market for only a few days. Nomisma’s survey suggests that approximately 50% of agency-managed demand is oriented towards purchase transactions, supported by a mortgage in 73% of cases. The demand pressure on the rental market is increasing due to the gradual increase in mortgage interest rates, on one hand, and the growing number of residences shifted to the short-term rental market on the other. In the first half of 2023, the transaction activity of retail offices in Milan experienced a significant year-on-year decline of around -33%, with only 430 properties exchanged in the market, compared to 652 in 2022 and 671 in 2021. In the second half of 2023, average prices continue to rise for the fourth consecutive semester, with positive changes both on a semi-annual basis (+1.2%) and on an annual basis (+2.9%), despite a negative result for properties located in business districts. Average discounts remain stable in attractive areas (9-11%) on a semi-annual basis but increase in the suburbs (14%). The average rental rates have been increasing since the first half of 2022, with an average annual growth rate of +1.2%.
The context remains stable for absorption times, both for sales (6 months) and rentals (4-5 months). The average gross annual rental yield remains almost stable at 5.1%. In the first half of 2023, the volume of retail store transactions in the Milanese market experienced a slight year-on-year decline (-2.6%). In the retail sector, the average price trend continues to rise on an annual basis (+1.8% semi-annually). The absorption speed decreases progressively for more central locations, with average selling times of 4-5 months in the city center and 6-7 months in the suburbs. The average discount on the asking price increases slightly (9.5%), remaining the lowest among major cities and the only one in single digits. In the rental sector, average rental rates increase slightly on a semi-annual basis (+1.3%). The market shows fast absorption times (3-4 months), slightly longer in the suburbs. Average gross annual yields remain almost stable at 6.7%.