Does climate affect real estate dynamics?
In Paris, there is a hemorrhage of residents fleeing to the province due to a series of factors, firstly property values, then pollution, traffic, and Covid, which has led to the development of smart work. As well as global warming. Stefano Montefiore narrates it in a report from the French capital.
And from us? There is no doubt that prices, traffic, pollution and smart working also encourage the flight of residents from large cities and above all from them. Milan, a city that for years has seen its residents renting properties outside the city limits Which holds the national record for all four factors mentioned above. But does heat also have something to do with it? Considering that if you leave the Lombard capital for a municipality in the hinterland, you will certainly not end up in a climatic oasis.
Well, the answer is positive, because climate greatly affects real estate dynamics and this is what was stated in a scientific document, “Temperatures and Search: Evidence from the Housing Market”issued in English last July by the Bank of Italy and signed by Michele Cascarano and Filippo Natoli (Available here).
Limit 25 degrees
The study, based on immobiliare.it and Tecnocasa data across Italy, links the sales trend and the number of days with average temperatures above 25 degrees Celsius, and shows that When temperatures are less pleasant, the number of clicks on gates and appointments decreases Personally visit properties for sale. The study took into account about two million ads that appeared between 2016 and 2019, that is, before the pandemic disrupted the market for two years, and also took into account the scheduled dates. Extended sales times resulting from lower traffic inevitably lead to a greater discount compared to the initially requested price. And at least over the five-year period the study considered, the time needed to find a tenant for rental homes also became longer.
Temperatures in the city: calculations that need to be done
This is the first study on such a large scale to be conducted in Italy. The National Reconciliation Committee had conducted a similar experiment in 2022, but the analysis was limited to the Florence municipal area.
We come to the numbers obtained by the researchers from the Bank of Italy. The study, as we said, takes into account months in which the average daily temperature (understood as the sum of the minimum plus the maximum divided by two) exceeds 25 degrees for more than 4.3 days, a figure obtained starting from the average of 3 data, 3 with one day added as the “confidence interval”. To get an idea of what an average temperature of 25 degrees means we limit ourselves In Milan in June, there were nine days with high temperatures, according to meteorological station data From Lenat. 13 in July, 14 in August, and none yet in September. The result is three summary statements. The first is that in months where the 4.3-day average is exceeded by even just one day, ad clicks for the month decrease by 1%. The second is reduced appointments: just one day of heat leads to a 2% drop in visits to properties over the entire month. The effects on orders are longer lasting: advertising prices fall on average by 0.2% and the effect lasts for a full year, while the effect on rents (which, however, are generally less negotiable than sales) is nullified.
Prices and sale times
But perhaps the most interesting aspect of the study is another: the selling times and prices of well-insulated homes with large outdoor spaces (a rare commodity in the city) are less affected by the temperature effect. When talking about energy rating, it is a mistake to focus exclusively on savings In heating, neglecting the fact that a home with a good energy rating not only cools by spending less but also provides greater comfort.
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