Exclusive residences in Milan: demand is pawing, but supply is not keeping up.

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The Observatory of Exclusive Residences for the second half of 2018, an analysis of the highest segment of the real estate market for the city ofMilan, was released today, now in its 15th year.With index 100 set at 2011, average sales prices have returned to 96.5, having recovered nearly 10 points from the 2014 inflection point.

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Compared with the first part of the year, asking prices still rise by 1.4 percent in the average value, 1.7 percent in the average maximum (houses in the first quartile by total price, thus the most exclusive and expensive). Top prices per square meter increase by as much as 2.1 percent. The Quadrilateral records both the highest asking price for a residence on the market (20 M€) and the highest value transaction realized, a house paid 8.6 M€.

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The market absorption index rises to 19.4 percent, the highest value in six years, but with a slowdown in the growth trend due to increased caution in buyers' purchasing decisions and a chronic lack of quality supply.

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Average discounts obtained through negotiation on the asking price have a small decrease (7.7 from 7.8 percent). However, the variance of the average is very high. In fact, many transactions take place at the price or with simple rounding, while discounts of more than 20 percent are also seen on the market. Still very good is the average selling time, now close to 9 months. Again, the summary value is highly variable, as the most valued homes have not lasted more than 2 or 3 months on the market, but the average still suffers greatly from homes that find a buyer only several years after they are first listed for sale. Consistently, the average time unsold properties remain very high, at nearly two years. There is no stopping the excellent momentum of rentals, which for the fifth consecutive six-month period show an improvement in the absorption index, back above the 25 percent threshold for the first time in four and a half years. Still decreasing, albeit fractionally, are both average rental times (apartments up to 90-100 sq. m. and ready to use are largely renting in two weeks at most) and average vacancy times for unrented properties. The average discount is slightly higher than in the previous six months(7.2%). In the second half of the year, asking rents are also registering widespread increases in all areas of the city, driven by a very sustained demand and a qualitatively growing supply. It is very difficult to predict the evolution of the segment in 2019 in terms of the number of purchases and sales, due to the concomitance of very positive factors - the attractiveness of Milan, the level of prices that is still fair in the international panorama to which the city now refers in its own right - and others that are decidedly less favorable - an insufficient supply especially at the high end and a domestic demand that may be negatively affected by the political economic climate for which the scenarios are very uncertain. It is likely that asking prices will still rise, especially in very high quality homes, a segment in which it will be increasingly difficult to find real estate product. The hope is that, in contrast to the last period of great expansion in 2005-2007, the price trend for mid-level houses will, however, be consistent with their intrinsic quality, so that they will not swell the stock of unsold, but will activate investment demand for income generation.