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Are house prices in Italy dropping due to coronavirus crisis?

The global pandemic is definitely having a huge effect on Italy’s real estate market, but house-hunters shouldn’t expect to see the market flooded with cheap properties just yet.

Are house prices in Italy dropping due to coronavirus crisis?
Photo: AFP

Italy’s property market has ground to a halt, as have the vast majority of sectors in a country that up until a few days ago was the worst hit by this global pandemic (now only surpassed by the US).

Estate agencies will remain closed for the foreseeable future and house viewings aren’t allowed, despite the gradual loosening of restrictions for some industries as of Tuesday April 13th.

Real estate agents say some 20,000 property sales in Italy have already been cancelled due to the coronavirus outbreak.

“Sometimes people have changed their mind and prefer to stay with their parents… or they have lost their job and the bank will not longer give them a loan,” said Chiara Ippoliti, an estate agent with Link in Rome.

So the question for many would-be houseowners – especially those with enough financial and employment stability to still consider it – is whether Italy’s unavoidable economic recession will result in house prices plummeting in the months to come.

Not quite, say the experts.

Italian financial consultancy firm Nomisma has studied current trends and published its results in its first report on Italy’s 2020 Real Estate Market.

The Bologna-based research company concluded that the Italian property market’s situation is undoubtedly very serious, with a drop in turnover of €9 billion to €22 billion compared to last year’s results for this first quarter.

Their estimates suggest it will take three years for the country’s property market to recover, racking up a total of €122 billion in losses.

Nomisma also stressed that in 2020 there will be a fall of between 15 percent and 30 percent in disbursement of mortgages, all the fees and taxes the solicitor has to pay out to other organisations as part of the house-buying process.

“The real estate market is deeply linked to the trend in employment,” they’re quoted as saying in Vanity Fair’s Italy edition.

“The more unemployment and layoffs increase, the fewer families will buy houses.”

Before the outbreak of Covid-19 in Italy, Nomisma expected the unemployment rate to fall below 10 percent in 2020, but now the joblessness forecast is between 11 percent and 12.4 percent with a tendency to worsen in the following years up to over 13 percent in 2022.

This consequently means there will likely be a sharp drop in the real estate market for residential homes – between 50,000 and 120,000 fewer sales – in contrast with the 650,000 purchases that were expected before the pandemic.

The figure represents an overall fall in the property market of between 8 and 18 percent.

So with all this in mind, is it actually possible that house prices won’t drop?

Nomisma believes there will be a fall in prices, just not as dramatic as the drop in sales, at least not in the short term.

Property renting and buying platform Idealista.com reported in early April that the effects of the coronavirus crisis have yet to be noticed on the market, although they warned the next quarter will probably shed more light on the situation.

According to their data from the first quarter of 2020, house prices across Italy dropped by 0.4 percent, with the average price for second-hand properties now standing at €1,699 per square meter (annual decrease of 2 percent).

“Now that Italians have spent weeks confined in old houses or properties without balconies, their prospects for what constitutes a good family investment will change,” Mario Breglia, President of Scenari Immobiliari (Real Estate Scenarios), told Wall Street Italia.

“Rather than a new SUV model, they'll think it's better to buy a house with an extra room.

“The demand for homes, which has long been there, will grow and will need properties (new or refurbished) that are suitable for the times, high quality properties capable of offering a safe and healthy living and working environment.”

For those still intrigued by the prospect of buying an Italian property at a discount, it’s worth noting that viewings in person may not be possible for a while, with one option that will perhaps become more common being virtual viewing.

How about you? Would you buy a home without seeing it in the flesh? 

Member comments

  1. Yes, I put a contract on a home without seeing it first. Just online pictures. Saw the home in January, 2020 and closed in March, 2020. I love the home.

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PROPERTY

‘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. 
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