The House Price Index (HPI) measures the evolution of market prices of all residential properties that are purchased by households (flats, detached houses, terraced houses, etc.), both new and existing, independently if bought for own-occupancy or as an investment.
According to preliminary estimates, in the first quarter of 2020 the HPI (see Italian IPAB) increased by 0.9% compared with the previous quarter and by 1.7% compared with the same quarter of the previous year (it was +0.2% in the fourth quarter of 2019).
The increase on annual basis of HPI, the largest since the second quarter of 2011, was due both to the prices of new dwellings that showed a positive rate of change equal to +0.9%, (from +1.4% in the previous quarter) and above all to the prices of existing dwellings that increased on annual basis by 1.9%, showing a clear speed-up compared to the fourth quarter of 2019 (when the change was zero).
The increase of HPI occured in a context of a sharp drop of the volumes of sales (it was -15.5% the annual rate of change registered for the residential sector in the first quarter of 2020 by the Observatory of Real Estate Market belonging to Tax Office) due to the measures adopted to contain the spread of Covid-19 which drastically limited the possibility of signing notarial deeds, leading, since March, to the sharp decrease of transactions.
The divergence between price trends (increasing) and volume trends (sharply decreasing) shows how the restrictive measures introduced in March did not have a significant impact on the prices of residential properties recorded in the first quarter, as notarial deeds of sales were finalized under conditions established before the health emergency.
The increase on quarterly basis in the HPI was due only to the prices of existing dwellings that rised by 1.2%, whereas those of new dwellings decreased by 1.2%.
With the release of HPI for the first quarter of 2020, corresponding weights, as usual, are updated and disseminated. In particular, the weight of new dwellings amounts to 16.7% (it was about 35% in 2010) against 83.3% of the existing ones.