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Italian property market to steady next year

The Italian property market has seen a marked drop in prices and sales volumes as a result of the global economic crisis. However, as mentioned in a previous blog, Italians still view property as a relatively safe haven given the turbulence in financial markets. Now the prediction is that faith will be rewarded with the Italian property sector tipped to recover next year. But the effects of the crisis on the housing market have been clear. Last year saw a 15.1 per cent drop in the number of residential properties that changed hands in Italy and a 15.5 per cent drop in sold office space, according to Italian economic researchers Nomisma. In starker terms, the record 845,000 properties sold in 2006 had fallen by nearly 40,000 units by 2007 and by another 120,000 by last year, returning to sales levels last seen in the early part of the decade. A large part of the plunge in demand came among buyers who would normally have relied on obtaining a mortgage to fund their purchase. They have been hard-hit as traditionally conservative Italian lenders become even more reluctant than ever to grant credit. As a result, nearly three in five Italian property sales involve cash buyers who do not need to acquire a new mortgage. The figures mirror what is going on in the wider Italian economy. The gloomy economic crisis has led to Italian GDP predictions for 2009 and 2010 being significantly revised. As recently as autumn 2008, the prediction was for the Italian economy to grow by three per cent in 2009 – now highly unlikely. At a household level, the final three months of 2008 saw Italian families feeling much less wealthy than they did just a few months previously. One in three believes their current income levels to be insufficient to meet their monthly outgoings, a huge leap from the one in 10 reporting similar sentiments a year earlier. The difficulty in maintaining an adequate standard of living is also seen in the number of households who struggle to save – 50 per cent in 2007 up to 70 per cent in 2008. This saw household expenditure fall by €2billion in 2008, with a predicted further fall of €7billion in 2009. Nomisma predicts a fall of between eight and 10 per cent in property sales volumes over the course of 2009, with a consequent fall in prices of between seven and eight per cent. However, its researchers reassert that Italians still see bricks and mortar as a safe refuge in the short to medium term, particularly given the stormy conditions in other traditional investments. The government’s efforts to resuscitate the economy through a package of fiscal measures linked to housing renovation development should bear fruit and Nomisma expects the property market to stabilise in 2010 – especially if banks loosen the purse strings. Its report states: “If banks allowed more access to credit, this could provide the extra liquidity needed to restart interest in property investment.” Enjoyed reading this article? Then why not take a look at our vast range of property for sale in Italy?