Italian property purchasers keep faith in bricks and mortar
Despite the current price slowdowns in the Italian real estate market, an examination of figures from the latter half of 2008 and early 2009 has highlighted some clearly discernible trends.
One may be classified as the initial green shoots in the property in Italy market, in large part fuelled by the global financial uncertainly as investors move their capital from stock markets and invest it in solid bricks and mortar.
The other is a greater tendency by prospective purchasers to dwell longer on transactions, especially in light of growing uncertainty about job security.
This propensity to linger is most prevalent among homeowners trying to sell one property and at the same time buy somewhere else.
As mentioned in a previous blog, Italian real estate agents are increasingly reporting an upturn in demand, sparked by tumbling mortgage interest rates as well as house prices, offering much greater opportunities for buyers looking for homes for sale in Italy.
Italy’s provincial capitals and both the outskirts and centres of its large cities have seen property price drops of around 3.5 per cent to four per cent.
One of the major factors that has led to the slow pace of transactions in the Italian housing market has been Italy’s innately conservative credit institutions exercising even more caution in lending decisions.
This naturally has created huge difficulties for the majority of clients who are unable to put down substantial deposits towards house purchases.
This lack of liquidity and the gloomy outlook for the Italian economy of the country has seen lenders apply even stricter criteria to the loan-to-value ratio of mortgages.
Hardest-hit have been single-income households, young people, foreign buyers and workers on fixed-term contracts.
Those buyers who can afford to venture into the market are demanding more for their money, insisting on paying what they deem a fair price for the quality of property on offer.
This has seen a fall in demand for and prices of used properties compared with new-builds and restructured/restored properties.
In general, it is the so-called “popular” end of the property in Italy market that is seeing the largest price reductions. At the other end of the scale, the types of homes that are best weathering the stormy market conditions best are in the prestige sector, where properties have held their value.
However, even among these high-price investors there is a greater insistence on ensuring that properties tick all the right boxes.
Overall, the current market conditions have seen buyers favour properties that are bright and airy; those have open external spaces; apartments on upper floors of buildings; homes with garages and/or parking spaces; and in tranquil areas with low traffic.
Buildings that don’t meet these criteria, in particular ground-floor apartments or upper-floor apartments in blocks without a lift, have suffered significant reductions in demand and prices.
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