Italian property prices hold despite drop in sales
Words by Carla Passino
Slow and steady. That’s the snapshot of the Italian property market in 2009, according to the Agenzia del Territorio, Italy’s equivalent of the Land Registry.
The Agenzia has just published its annual report on the Italian market, which analyses data from 2009. Some 1.347m transactions took place in the country last year - a markedly lower number than at during the property boom.
Concerns over equity and a gap in buyers and sellers’ price expectations both conspired to depress sale volumes, which were down 11.3% over the previous year. In 2008, the annual drop had been of 13.7% over 2007.
However, the tide appeared to change at some point during the second half of 2009. While the first quarter of the year recorded a staggering 18.6% reduction in sales over the same period in 2008, by the last quarter, they were only down 4% over the previous year. The trend affected every property segment, but offices and residential performed better than commercial and industrial properties.
Likewise, some geographical areas held better than others. In the last quarter of 2009, Northern Italy saw a greater drop in residential sales than the South (-6.4% against -0.7%) and the Centre, which bucked the trend and saw a 1.4% increase. In particular, the market in Central Italy’s capital cities went up by 4.6%.
It is also interesting to note that mortgage-funded purchases performed better than average, reversing a previous trend. Last year, mortgage buys decreased by 10.8% against an 11.3% average for residential homes, whereas in 2008, the mortgage market drop had been a massive 27%, against a 15% average. The report researchers believe that the dramatic reduction in interest rates helped support mortgage-funded purchases last year.
What is of greatest interest to Italian property owners, however, is that housing values proved remarkably resilient. Despite the significant contraction in sales, prices only went down by 0.7% in the second half of 2009 over the same period in the previous year. And putting the numbers in a longer term perspective, values today are 28.7% higher than in 2004. Southern Italy was the steadiest location, recording stable prices in capital cities (-0.1%) and a small increase (0.4%) in smaller municipalities.