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PROPERTY

What will happen to house prices in Italy after the coronavirus crisis?

The pandemic hasn't yet had a major impact on house prices in Italy, studies show, but it is changing the market in some ways. Here's what could happen next.

What will happen to house prices in Italy after the coronavirus crisis?
Photo: AFP

There has been much speculation about how the Covid-19 crisis and Italy's three-month lockdown will affect property prices in the country – though experts have warned since April that buyers can't expect to see the market flooded with bargain properties anytime soon.

In fact, a new report released by Italian property portal Idealista shows that prices on average have in fact increased slightly during the shutdown.

The study showed a slight increase of 0.3 percent in May compared to April – when it had fallen by -0.1 percent. The three-month trend showed an overall increase of 0.6 percent.

The picture also varies significantly between regions and towns. The study recorded average price increases in 63 of the 110 Italian towns and cities it looked at. Six saw no change, while prices elsewhere had fallen.

In the economic capital Milan, prices dropped by 0.8 percent in May, after starting to fall in April.

There have been reports that many Italian house-hunters are now abandoning the cities and looking for rural properties following the Covid-19 outbreak. However, the Idealista study found house prices continued to rise in most other cities – including by three percent in Naples, and 1.2 percent in Bologna and Turin.

However, despite small fluctuations, average house prices in Italy have been dropping since 2012. Since May 2019, the average property price has fallen by -2.1 percent overall year on year, the report showed.

READ ALSO: What's wrong with the Italian property market?

But it may be too early yet to judge the true impact of the pandemic on property sales.

“Covid-19 has understandably changed market conditions, but prices are stable at the moment,” Stated Vincenzo De Tommaso, Head of Idealista’s Studies Office. “After forced inactivity due to the virus, sellers are waiting to see how buyers who visit their homes will behave and what offers they receive.“

“There is no lack of demand, but in order to regain the pace of sales, perhaps it will be necessary to adapt prices to market circumstances.”

Photo: Unsplash/Cristina Gottardi

Italy's property market ground to a halt under the strict lockdown. Tens of thousands of property sales had reportedly been cancelled by April, often due to job losses or people changing their minds for other reasons connected to the crisis, estate agents said.

“The real estate market is deeply linked to the trend in employment,” Italian financial consultancy firm Nomisma said in its most recent report on the Italian property market. “The more unemployment and layoffs increase, the fewer families will buy houses.”
 
The Bologna-based research company found that the Italian property market started the year in a very difficult situation, with a drop in turnover of €9 billion compared to last year's results for the first quarter.
 
Estate agencies were allowed to reopen from early May, though many say restarting has been gradual, particularly for italy's international market as some travel restrictions remain in place.
 
Many prospective buyers hoping to buy a property as a holiday home or investment have been watching the market closely to see if their money may go further following the shutdown.
 
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However, Italy's international market, geared towards retirees and second-home owners, is expected to be more resilient than the national market overall.
 
“From the middle of April, I can say the number of enquiries we're getting has increased and is now almost the same as the pre-Covid 19 situation,” said Sara Zanotta, founder and director of Lakeside Real Estate in Lake Como. “Buyers who cancelled their trips and meetings with us are now trying to reschedule for July-Septemb

Agents say they’ve had to find new ways of working, which have often turned out to be a bonus for clients based abroad.

While visiting a property in person is now possible again, agencies say many clients – both buyers and sellers – now prefer virtual tours. Many are now providing this service for the first time.

The crisis also appears to have changed buyers’ priorities.

“I can tell you that most people now are looking for properties with a large internal space, and an outside area,” said Zanotta. “I think this period showed a lot of people how important these requirements are.”

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Zanotta explained that, for the international market at least, “there's no reason why prices should be reduced.”

“I think prices are going to stay stable – except for in some internal area of Italy, where the market is pretty much for Italian residents only,” she added.

“At Lake Como, I can state that prices are still the same. Importantly, people who come in Italy, and to Lake Como especially, are not looking for super-bargains or take advantages of a bad economic situation.”

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PROPERTY

‘It’s so frustrating’: My 25-year Italian property renovation nightmare

When US-based Davide Fionda embarked on renovating his mother's Italian property, he couldn't have imagined the obstacles and the timescale in store.

'It's so frustrating': My 25-year Italian property renovation nightmare

Building a home in Italy was almost inevitable for Davide, as he’s been visiting the same area in the Le Marche region, where his Italian-born mother grew up, since he was five years old.

Although he lives in Boston, US, and speaks with a charming East Coast twang, he’s also an Italian citizen and has long dreamed of having his own place to stay for the summer.

He began making this dream a reality back in 1997, when a barn that had been in his mother’s family for generations, in the village of Schito-Case Duca, was damaged by an earthquake.

“My mother, who had both her mother and sister in Italy, decided that it would be really nice for us to build our own new home instead of relying on family to host us each time we visit,” Davide said.

“The goal was simple. I would acquire the barn from my mom, renovate it and move in for the summers, as I’m a college teacher and can spend time in Italy,” he added.

“Simple” the goal may have been, but the project itself proved anything but, as Davide came up against unforeseen bureaucratic problems, legal hiccups and personal disappointments.

READ ALSO: The hidden costs of buying a home in Italy

As a former entrepreneur in his professional life, he said he’s “used to getting things done”, owning five companies and selling three.

But conquering Italian property renovation is his biggest challenge to date: “Never in my life have I had so many complications as I’ve had with this house,” he told us.

The earthquake-damaged barn. Photo: Davide Fionda

“In the beginning, I knew exactly what I needed and the costs to carry out the project. My mother was, and is still, living in the United States: the project started when she was approached by her godson, who is a geometra (civil engineer), to help her rebuild this barn.

“I started with what I could control. I sat down with an architect and we created a design. I did research on furniture and fixtures. But then the problems started,” Davide said.

His mother wanted a simple design: an open plan house with floor-to-ceiling windows facing the mountains, spanning two floors – a ground floor and a first floor for the bedrooms.

When they went to look at the progress in 2004, he said they were “horrified” at what they saw.

Instead of windows across the front as we asked for, with views of the spectacular Gran Sasso mountains, he took the entire view with two hallways for entering the property and for the bathroom. The bedrooms upstairs were unusable,” he added.

Davide describes himself as “not a typical Italian”, at two metres in height ,and says he always looks for suitable showers and beds when visiting Italy.

It was one of the reasons building his own home was so attractive, as he could custom-make it to fit his needs.

READ ALSO: What taxes do you need to pay if you own a second home in Italy?

But when they viewed the build, he discovered the first floor had ceilings of just one metre and 40 centimetres – not liveable for most people, never mind someone with Davide’s towering frame.

The results didn’t match the renovation plans that had been filed with the comune (town hall) – they wouldn’t have been approved otherwise, as Davide discovered Italian regulations deemed this height of ceiling in a bedroom uninhabitable.

He said he grew up with the geometra and knew him well, saying they were “best friends”. However, on raising the problems with him, Davide said the building professional “refused to fix the house”, adding, “he took my mother’s money and built a house with no bedrooms”.

He said his mother decided to stop construction after spending almost $100,000 on a house that they “could not live in”, adding that they “returned many times over the years to see the shell of the building that we thought we were going to call our home”.

READ ALSO: My Italian Home: How one ‘bargain basement’ renovation ended up costing over €300K

Faced with a stalled project and unsure what to do next, Davide tried to sell the property but got nowhere. He said the “market wasn’t right” for selling it, so he considered his options for fixing the botched renovations to date.

His Italian property project has been stalled for over two decades. Photo: Davide Fionda

Then, eventually, in January of this year he decided “he was sick of looking at it and it was time to act”.

He intended to use Italy’s Bonus ristrutturazioni (Renovation bonus), which allows homeowners to apply for a 50 percent tax reduction on carrying out renovation work.

On asking for professional opinions on whether the house qualified for this bonus, he said he asked five different people and got five different answers.

In the end, he discovered it was eligible and so he could, in theory, proceed with his latest plans.

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The aim is to create his mother’s original vision – an open plan space with huge windows overlooking the mountains and bedrooms on the first floor – but habitable this time.

Since the beginning of this year, however, Davide has been stuck and hasn’t made progress.

Setbacks have included trying to get a permit to renovate the house, which has proved difficult since the first geometra reportedly didn’t update the changes to the building.

This thorny issue goes back to exactly who owned the house, as Davide told us it had been sectioned off and parts of the house were owned by various members of the family.

The building headaches roll on for Davide. Photo by Martin Dalsgaard on Unsplash

“Italian law makes you want to rip your hair out,” he said.

Getting the deed in his name has been a huge obstacle in itself, as his mother wasn’t the sole owner and some parts of the land that belonged to her were never recorded.

It’s meant months of waiting while archives have been searched and deeds have been drawn up and transferred, made all the trickier by coordinating it all from thousands of miles away.

Plus, the house category was never changed to a residential one, listed previously as farmland and therefore illegal to live in.

It’s just more unexpected bureaucracy for a project that seems to have no end.

“It has been months and months of all these twists and turns, it’s so frustrating,” he told us.

“This has been a 25-year nightmare,” he added.

A partly restored, but unliveable barn for Davide now. Photo: Davaide Fionda.

Although Davide had originally planned to sort out the more practical parts of the project by the end of May, with a ticket booked to Italy to choose the windows, he’s still stuck in the paperwork part and can’t move forward.

Nothing has happened since January. Three or four times I said, ‘screw this’. But it’s not in my DNA to give up,” he said.

Although he has a strong will, the house has taken its toll on him.

Every time we go, this house stares us in the face and it’s upsetting. Family always ask us, ‘when are you going to finish the house?’ It’s a real source of heartache,” he told us.

From this point, he hopes the paperwork will be completed by August and then he can meet with the contractors to get the process started.

That in itself was a tall order, due to the construction demand and shortage of building companies Italy is currently experiencing.

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It’s a problem made even more challenging by the fact that he’s based in the States and had to find a company that would apply for the credit for the bonus on his behalf.

Despite it all, he’s hopeful that he will get the house they dreamed of by next August and says he’s learned a lot about renovating property in Italy.

For other would-be home renovators, he advised people to “adjust their timeframe expectations” and expect “anything to do with land or real estate to take forever”.

So what is his secret for not giving up, despite the rollercoaster of events and emotions?

It seems he’s holding on to his vision of blissful summers in il bel paese.

“The beauty of Italy is to be, sit in a town square and have conversations,” he told us.

“It’s a beautiful thing.”

See more in The Local’s Italian property section.

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