Words by Carla Passino

Expectations have improved for the Italian property market. The news comes from economy intelligence company Nomisma, which has just published a report on prices and sale volumes in Italy in the second half of 2009.

The Nomisma researchers found that market indicators remain weak but slightly less so than in the past. “Housing prices have gone down for the third semester in a row,” they write. “However, it is important to note that the decrease in the last semester is smaller than the previous one’s and both are smaller than what was seen abroad.”

Indeed, they add, the decline in prices was very modest (1% in the second half of 2008 over the previous semester, 2.5% in the first half of 2009 and 1.6% in the second half of 2009) because the level of debt among Italian families and companies was lower than elsewhere.

In the Bel Paese, the recession-induced correction chiefly affected sale volumes, which experienced double digit drops throughout the end of 2008 and early 2009. Sales continued to fall in the third quarter of 2009, but by a smaller amount than before - an annual decrease of 11%, against 12.5% in the second quarter of the year and 18.5% in the first quarter. This means that by the end of 2009, sales will total 30% less than they were at market peak in 2006.

Sale times have also become longer (6.2 months) and discounts over the asking price bigger (in the region of 13.2%), though the market is performing better in Southern and Central Italy than in the north, and in big metropolitan areas than in the provinces.

That said, Nomisma registered encouraging signs of recovery for the residential sector throughout Italy. Estate agents report a gradual increase in demand, which in turn makes them more confident about the future. “All data converge to paint a picture in which the trough of the recession may have taken place in March or April this year,” states the report. “Since then recovery signs have intensified.”

However, add the researchers, the situation remains complex and hugely dependent on the interaction among a number of potentially positive and negative factors—insufficient access to credit, the size of the Italian national debt, the increase in unemployment rates, the inadequate rise in productivity and the persisting fragility of the financial system, but also the rise in GDP, production and demand.

Making a sensible forecast in this uncertain scenario is extremely difficult, but, with this proviso, the Nomisma researchers expect a further fall in prices to the tune of 1% or 2% in 2010, and a rise in 2011.