The Italian market is weak, but could be on the cusp of improvement. Unemployment stands at 12.4%, while youth unemployment is much higher at over 40%. While 2015 is likely to see further price falls, a modest improvement in economic performance may put a floor in price falls next year, starting with prime markets and major cities and encouraged by a cheap euro.
A mortgage guarantee scheme launched in January aims to stimulate the lower end of the market. Transaction levels are already recovering in the major cities.
The Italian market is underpinned by an exceptionally high rate of owner occupation, with 75% of the population living in mortgaged or outright owned properties, compared to 67% in the UK and 64% in France. By contrast, the rental market is small and low-yielding. In spite of weak domestic market conditions, a weak euro is attracting US and UK buyers to the second-home hotspots of Tuscany, Umbria and the Italian Lakes.
Germans are the dominant international buyer group, accounting for 45% of non-Italian buyers across the whole country, according to Scenari Immobiliari. American buyers are returning having largely withdrawn from the market in recent years. Interest has also picked up from British buyers, along with those from Scandinavia, Switzerland and Benelux countries. Russians, previously active in coastal resorts such as Forte del Marmi have largely disappeared given issues in their home market.
Italy’s prime, second-home markets are some of the world’s most desirable, characterised by their built heritage and natural beauty. In Lake Como’s rarefied residential market traditional properties with lake views are in limited supply and have continued to trade well when they become available, sustaining prices.
History, heritage and the natural environment will sustain Italy’s appeal as an international destination for retreat property over the longer term even if some domestic real estate markets continue to languish.