Italy’s real estate market is recovering: what and where to buy?
Statistics confirm: a long decline in the real estate market in Italy has come to an end. Prices have reached the bottom, demand is recovering, construction activity is growing, realtors and developers are optimistic about the future, and the government is introducing tax breaks for foreigners. The question is how to take advantage of the situation and buy quality real estate at the best price. We understand together Carla Meoni, the head of Olon Property.
A bit of history
From 2000 to 2008, housing prices in Italy increased by 53%, taking into account inflation. Such data leads consulting company Nomisma, founded in Bologna in 1981. The global financial crisis has led to a change in trend: since the second half of 2008, real estate has begun to fall in price.
There was no crushing collapse; nevertheless, from 2008 to 2014, prices fell by an average of 16%. In 2015, the decline slowed, but over the next three years, square meters lost another 4-5% of their value. At the end of 2018, the Statistical Committee of Istat recorded a symbolic decline at all – 0.6% per year.
Of course, this is the average data for the country. There have always been and will be objects that are knocked out of the general rules. Prices for premium villas and apartments in the best locations are usually not so strongly affected by the crisis.
But even from this generalized statistics, a practical conclusion can be made: in 2019 you have a much better chance of finding a property in Italy with a better combination of price and quality than ten years ago. But to count on the fact that the cost of housing will continue to fall, especially not worth it. And that’s why…
Signs of recovery
In addition to statistics on the average cost of housing in Italy, it is worth looking at other market indicators. Almost all of them are optimistic.
First, convincing sales growth. According to official data from Istat, in 2018, the number of housing transactions increased by 7.8%. This is the largest figure in the last two years. And we all know that, according to the laws of the market, strong demand always pushes prices up.
At the same time – what is important – the growth in the number of transactions is observed literally in all regions of Italy. Plus 10.1% on the islands, 9.9% in the northeast, 9.7% in the center, 7.4% in the northwest of the country. And even in the southern provinces of Italy, which are economically lagging behind the northern ones, real estate sales are growing – plus 2.8% for the year.
Secondly, the development of the credit sector. In the 4th quarter of 2018, Italian banks issued 115,478 mortgage loans, which is 8.4% more than a year earlier. The ability to get leverage is a convincing argument for many buyers. Most likely, banking activity will stimulate further growth in the number of transactions.
And, thirdly, construction activity is growing. Italian developers are clearly looking to the future with optimism and increasing volumes: in the third quarter of 2018, the number of new buildings increased by 8.8% per year, and the total area of construction – by 9.9%.
And finally, the most important thing – according to Italian market experts – is an event in the industry. In 2017, the Italian authorities introduced a special tax regime for new residents (the so-called non-dom).
According to the amendments, individuals can transfer their fiscal residence to Italy and replace taxes on property income throughout the world with a fixed fee. Rate – € 100 thousand per year; tax regime can be extended to relatives – € 25 thousand per year for each. At the same time, there is no need to disclose information about international residents’ assets.
Carla Meoni, head of the Italian company Olon Property, shares her vision of the market and advises which regions and objects to pay attention to in 2019–2020.
– The region most famous and sought after by foreign property buyers is Tuscany. Many start acquaintance with Italy from him and fall in love with our country. I understand them: Tuscany is wonderful – both in coastal areas and in rural areas. In addition, it is easy to get here, several international airports – which is convenient for foreigners. And in terms of investment, price stability, the place is safe and secure. In addition, there is strong demand for short-term rental. If you want to take the property, there will be no problems.
On the other hand, Tuscany is a kind of mainstream. For those who want something special, I can recommend a few more locations in Italy, where real estate is in demand and liquid.
Take a closer look at Sicily. Now among the Italian celebrities, representatives of the world of art and show business, this is the most desirable region. Foreigners are also interested in them, especially the Americans. In Sicily, the sea is magnificent, the beaches are magnificent, and in the local real estate market you can find stunning authentic villas. At the same time, housing prices are at least 50% lower than in Tuscany. Of course, many Sicilian mansions require renovation, but by investing in repairs, you will receive a unique object that you can sell more expensive.
Another noteworthy place in Italy is Lake Como. International buyers are interested in it – from India to Australia, from the USA to China – is very strong.