Construction downturn in 2019, possible recovery from 2020
THE CONSTRUCTION MARKET SITUATION IN ITALY
The recovery showed signs of a slowdown at the end of 2018
In 2018, the main driving force behind construction growth came from residential construction, thanks also the recovery in the new housing sector. However, there are no signs of the downturn in civil works coming to an end.
Table 1 - Construction investments (var.% mln/yr.)
[total = grey; residential = blue]
Source: Prometeia analysis of Istat data
Table 2 - Construction investments (var.% over previous quarter)
Source: Prometeia analysis of Istat data
THE REAL ESTATE MARKET
The positive trend for transactions continues
Transactions posted an increase of 6.6% in 2018, thereby consolidating the expansionary trend underway since 2014. However, the fall in prices has not yet fully stabilised.
Table 3 - Residential sales (var.% over corresponding quarter)
Source: Prometeia analysis of Local Area Agency data
Table 4 - Price of housing (2015 index = 100)
[secondhand = blue; new = light blue]
Source: Prometeia analysis of Istat data
RESIDENTIAL BUILDING
The recovery in building new homes has been consolidated
The positive trend for building permits in 2016-2017 sustained the reversal of trends in the new home sector. The propensity of families to invest in home renovations is high.
Table 5 - Permits for residential buildings (number of homes, thousands)
Source: Prometeia analysis of Istat data
Table 6 - Intention regarding special maintenance costs (% positive feedback)
Source: Prometeia analysis of Istat data
NON-RESIDENTIAL BUILDING
A further, significant increase in building permits
Transactions in the sector posted a fluctuating trend but there were signs of recovery at the end of 2018.
Table 7 - Permits for not residential buildings (thousands of m2)
Source: Prometeia analysis of Istat data
Table 8 - Non-residential sales (var.% over corresponding quarter)
[productive segment = blue; tertiary-commercial segment = light blue]
Source: Prometeia analysis of Local Area Agency data
PUBLIC WORKS
The recovery on the public works market continues
The positive signs of calls for tenders are struggling to materialize in a resumption of capital investment spending, confirming the gap between the publication of the announcement and the actual departure of the yards.
Table 9 - Tenders for public works (in mln €)
Source: Prometeia analysis of Ance data
THE MAIN MEASURES FOCUSING ON THE SECTOR
Measures launched by the Government
- Central Government Investment Funds
- Local Area Investment Funds
- Hydrogeological Protection Plan
- Investitalia & Strategia Italia
- Public Works central planning
- “Unblock Construction Sites” decree?
CONSTRUCTION DOWNTURN IN 2019
Possible recovery from 2020
The recovery in construction investment is estimated to fall in 2019, with signs of a slowdown across all sectors, not the least in view of the deterioration of the overall economic situation and the persistent weakness of public works.
In 2020-2021, the cycle is expected strengthen, driven especially by civil works, on the assumption that higher allocations of resources may well materialise in an effective resumption of public investments.
The perspective framework, however, presents several downside risks.
ITALY: INVESTMENTS IN BUILDINGS
| BUILDING INDUSTRY | 2017 values mln € |
2018 | 2019 | 2020 | 2021 |
| RESIDENTIAL of which: - new * - renovations * |
75,061
15,483 49,755 |
2.3
3.6 2.8 |
0.7
2.0 0.7 |
1.8
2.3 0.7 |
1.5
2.3 0.9 |
| NON-RESIDENTIAL | 39,919 | 4.0 | 0.8 | 2.4 | 1.8 |
| PUBLIC WORKS | 22,910 | -2.3 | -0.2 | 2.5 | 2.5 |
| TOTAL BUILDINGS | 137,890 | 2.3 | 0.7 | 1.8 | 1.5 |