What’s wrong with the Italian property market?

New figures show that while property prices across most of Europe are rising, the Italian market seems to be lagging behind. But it's a bit more complicated than that.

What's wrong with the Italian property market?
Medieval buildings in central Florence: apartments here may be pricey, but it's not the case everywhere. Photo: Depositphotos

What’s going on with Italian property prices? Nothing new, you might say. But a snapshot of the market reveals some curious trends, which we’re attempting to make sense of.

Overall, the latest data from Italian statistics agency Istat shows that property prices in Italy are stalling in contrast to most other member states.

Italian house prices have fallen by 0.4 percent year on year. Not exactly a dramatic drop, and better than the -1.2 percent recorded this time last year. But this goes against the trend across Europe, where house prices are up by 4.3 percent on average; the figure identical in both the Eurozone and the whole of the EU.

According to Istat: “Of the member states with data available, the highest annual increases in house prices in the third quarter of 2018 were recorded in Slovenia (+15.1%), the Netherlands (+10.2%) and Ireland (+9.1%), while prices fell in Sweden (-2.1%) and Italy (-0.8%).”

So what’s happening in Italy?

As the map below shows (click here for the interactive version) there are of course some pretty big price differences from region to region, as well as within regions.

The map, using data from July 2019, shows the average asking price per square metre of all property posted on the popular home search website.

It shows the highest prices by far were found not in Rome but in the Valle d'Aosta region, where the price per square metre was three times that of property in Molise, where prices were lowest.

A map created by home search website shows how prices per square metre vary across Italy's regions. Screenshot:

But most importantly, experts point out that there are very big market differences between different types of property, meaning it’s not entirely true that Italian real estate is depreciating. 

Short-term rental prices are soaring and new-build properties are recording rising prices. And prices in Italy's cities have been famously high – and rising – for a long time now, following a more familiar trend.

In fact, in the third quarter of 2018 the value of new homes grew by 1.2% compared to the same period of the previous year. And in the second quarter the increase was 1.4%.

But the Istat figure is a country average, taking in everything from the newest luxury city-centre apartments to crumbling, historic homes in the country's growing number of near-abandoned vilages.

Look closely, and you'll see that older houses are the ones losing value. And they're losing it to such an extent that the country still ends up with a negative growth figure – even if the market is not completely stagnant.

There are apparently many factors, and would-be homebuyers struggle with everything from rising poverty to high taxation.

But the quality of the older properties on the market is one problem that seems to be weighing the market down.

“Firstly, in recent years the price of these properties had grown too much. And there’s the fact that Italians do, on average, very little maintenance on their homes,“ Maurizio Sgroi, economic journalist and author of the blog The Walking Debt, told Repubblica.

Even the briefest look at houses for sale in smaller Italian towns and cities reveals that the vast majority of houses available have not been renovated for decades, boasting appliances that belong in a museum, terrible energy efficiency ratings, and often, serious structural issues.

READ ALSO: Why Italy is 'giving away' 100 historic buildings for free

Houses in places like Rome will sell anyway, but “in smaller provinces, the price of a house that has never been renovated just collapses,” says Sgroi.

The price and hassle of major renovation work is off-putting for many who, the figures appear to show, prefer paying more for a new property.

Another problem for buyers is that nicer properties will often be turned into bed and breakfasts or rented out on Airbnb, Repubblica writes.

Sadly ,not all houses for sale in Italy look like this one. Photo: depositphotos

“In reality, in our country only those who can really afford it are buying property: those with stable jobs, those who are selling a property, or parents buying property for their children,” says Sgroi.

He also points out that interest rates on mortgages right now are at a all-time low and, despite improvements in the market since 2015, sales are still a long way from pre-crisis levels.

The figures paint a picture of a depressed market, though in some ways it is more accessible to young first-time buyers than in many other European countries – if they can find a house worth buying, that is.

One first-time buyer, 30-year-old Emanuele Reale, tells The Local Italy how he’s just bought his first home in a small town near Siena, Tuscany, for 123,000 Euros.

The previous owner had paid 180,000 Euros for the house in 2011 and put it on the market last year for 155,000, but right now buyers like Emanuele are able to bargain hard.

And experts aren't expecting the market to pick up any time soon.

One estate agent in Arezzo, Tuscany, who didn’t want to be named, says that he doesn’t expect house prices locally to increase “in the next two or three years, at least not for older properties, of which we have very many.”

Sgroi, too, is pessimistic: “In Italy most over-65s own one or more properties. When these people pass away, a generation of Italians will inherit.”

“But this stock of houses is destined to end up on the market anyway, because not everyone can afford to keep them, and because there will be more houses than there will be people who inherit them. The result? Property prices will fall again.”


Member comments

  1. Thanks for the useful information.

    As someone on the outside looking in, it is hard to see past the macro trends into the details, which is what is needed in order to make decisions.

    I’m not presently in a position to fund the kind of down payment they require, or move to Italy (although that is more my relationships than my work, which is largely mobile), but this kind of information is helpful in deciding whether I even want to consider buying a home in Italy in the mid to long-term future.

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‘A life’s task’: The lessons learned from turning a crumbling Italian church into a home

Back in 2000 Marilisa and Riccardo Parisi, a Neapolitan couple in their 60s, snatched up a dilapidated little church in Umbria which had been abandoned for 50 years. They tell Silvia Marchetti exactly what they learned so others can heed their advice.

'A life's task': The lessons learned from turning a crumbling Italian church into a home
An old crumbling Italian property dating back to medieval times with all its historic appeal and fascination lures anyone with a penchant for bringing back ancient buildings from the grave.
But it can be tough work with many obstacles requiring energy, time, lots of money and above all, patience.
Back in 2000 Marilisa and Riccardo Parisi, a Neapolitan couple in their 60s, snatched up a dilapidated little church in Umbria which had been abandoned for 50 years and upgraded it to their lavish rural house, with a cool cocktail lounge under the former altar and master bedroom in what used to be the bishop’s private lodgings.
The church, with the original bell tower still hanging and well-preserved frescoed walls, is actually the center of a tiny hamlet isolated in the countryside near Gubbio featuring stables, a barn and storage room which were also renovated and a wide patch of land with olive groves. 
“It was all a heap of ruins but I fell in love with the place at first sight,” says Marilisa.
“I could feel it had a soul and the stones were ‘talking’ but I knew straight away it was going to be a long, hard work to fix it up”, she said.
It took the couple 7 years to complete the restyle and faced with the many challenges encountered along the way, they admit they often thought of giving up. 

Riccardo and Marilisa Parisi at their Umbrian home. Photo Marilisa Parisi
Old properties, which are rendered more impressive by the passage of time, naturally come with downsides.
Dilapidated homes have a strong allure but breathing new life into them isn’t always as easy as first imagined, warns the couple.
Their church-house, which the Parisi bought off the local curia (diocese), is classified as a monument of historical and artistic value by Italy’s state.
The first obstacle was dealing with Umbria’s art authorities (sovrintendenza) to make sure the restyle plan respected the structure and architecture of the place. 
They warned that the older a property is, the higher the risk that it could potentially be of artistic and historic interest, which entails a significant amount of restrictions (vincoli) and rules imposed by the sovrintendenza in restyling it, and more paperwork than an ordinary property. 
The Parisi’s advice to people interested in following in their footsteps is to check beforehand whether the local art authorities may have jurisdiction over an old property, which could complicate and delay the renovation. 
“You can’t just sketch any kind of super-cool restyle that pops into your mind,” says Riccardo.
“When the art authorities are involved, even if the property is yours, you must draw up detailed plans and maps of how it will look like, what the restyle will entail, what building materials will be used, and share these with the authorities.
“So you need to employ architects specialised in preservation. It must be a minimal, sustainable renovation that doesn’t radically change the original structure with excessive fixes,” he adds.
So tearing down walls, adding extra rooms or pulling down a roof won’t be possible.
Marilisa says: “We tried to recycle the original furniture and materials, we kept the ancient stone steps outside in the courtyard, the old wooden tables of the church which we turned into thick doors, the original terra-cotta pavements and the church altar hall where we have evening drinks.”
She admits that having to deal with the construction team on a regular basis was a major hassle, particularly since they had to drive from Naples each time to check on the progress of the work.
The couple felt the stress that comes with renovating a property at a distance, by phone or internet without physically visiting and overseeing the builders and architect. It can be risky as key instructions can easily go missing.
They suggest it is very important to hire construction teams that can do the entire work rather than splitting it among different building companies so to assure continuity and a homogenous makeover style and techniques. 
“If you take on such a challenge of renovating a large property you must make it your life’s task and invest a lot of passion, energy and be ready to spend more than expected”, says Riccardo, who prefers not to disclose how much money has been invested. 
The specific location of the property can also be an issue. Bureaucracy was head-splitting, the couple had to not only reactivate utility supplies but rebuild all basic infrastructure because their home is in an isolated spot in the middle of a dense Umbrian forest.
“The place is wonderful, surrounded by pristine nature, there’s nothing around us and that’s a major plus point. But having been abandoned for so many years there was no running water, electricity, gas, so to make our home liveable again we had to rebuild the water pumps and electricity grid, activate a landline and internet,” says Riccardo.
“These are all things you need to consider when you embark on such a mission.”
Roads are another problem to be taken into account. It’s difficult to find the place, one needs to follow the directions given by the Parisi as it’s not mapped.
There’s just a tiny unpaved country path leading to their Umbrian retreat from the main road which they had to clear through the thick vegetation that had grown over the property’s estate across decades. The path is wide enough for one big car and needs constant maintenance particularly when it rains. 
“If you buy and renovate a lovely crumbly property in an offbeat, isolated rural spot you have to know that you’re starting from scratch”, says Riccardo.