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PROPERTY

House prices in Italy rise at fastest rate in a decade

Italian house prices rose by more in 2020 than they have in at least ten years, according to the latest official data, with some of the fastest growth in the south of Italy.

House prices in Italy rise at fastest rate in a decade
Could Italy's falling property prices finally be reversing? Photo: Tiziana Fabi/AFP

Italy’s house price index, which measures changes in the market price of residential properties, increased by 1.9 percent in 2020 compared to the year before, provisional figures from national statistics office Istat show.

That’s the most the index has grown since Istat began tracking it in 2010. Since then, Italian house prices have fallen in seven years out of ten.

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Growth was fastest in the south of Italy and its islands, where prices rose by 3 percent in the last three months of 2020 compared to the same period a year earlier. 

That seems to confirm reports that searches for property in the more rural south were booming amid the pandemic, as the rise of remote working drives more people to consider looking for more space in a cheaper area, or returning to southern hometowns after moving north for work.

Yet buyers don’t seem to be fleeing the cities altogether: in Milan, Italy’s densely populated economic capital, house prices grew by another 7.4 percent in the final quarter of 2020.

More broadly prices saw a smaller increase in the north-west (+1.7 percent) and north-east (+1.8 percent), but barely changed in the centre of Italy (+0.2 percent).

READ ALSO: ‘Reversed trend’: Property in southern Italy is now in demand due to the pandemic

Homes in Sicily. Photo: Giuseppe Cacace/AFP

After several years of decline, the latest growth takes Italy’s house price index roughly back to 2016 levels. Prices still remain 15 percent lower than when records began in 2010, soon after which house prices fell into a slump from which they have yet to recover.

Prices for newly built housing, which have remained far more stable over the past decade, grew by 2.1 percent over 2020 compared to the year before, its highest increase in at least eight years. 

But prices for existing homes, which have plummeted by more than 20 percent since 2010, saw the most dramatic reverse. They rose by 1.9 percent last year, the first time in at least a decade that they’ve grown by more than half a percent.

READ ALSO: Italy’s building bonus: Can you really claim back the cost of renovating property?

After an initial slump as Covid-19 first hit, sales of homes in Italy seem to have picked up sharply towards the end of 2020 as people reevaluated their living situation or looked to property as a solid investment.

As well as trends towards larger homes with outdoor spaces, forecasters have been predicting more interest in properties in need of extensive renovation after Italy introduced generous tax deductions on work to make buildings more energy efficient and earthquake resistant.

Buyers are also expected to seek out more modern, open-plan homes and broaden their search to city outskirts or rural areas, housing market experts say.

Member comments

  1. The Local has been an invaluable asset during our first 18 months as home owners in Sicily. Thanks to all who work on it.

    1. Thank you on behalf of the whole team, that’s great to hear.

      ~ Jessica at The Local

  2. Joining the chorus of thanks to all at The Local who work so hard to keep us informed. Having recently bought on an Aeolian island and having a rudimentary – at best – understanding of Italian, you guys rock! 👊🏻 THANK YOU!

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PROPERTY

How to avoid hidden traps when buying an old property in Italy

Buying a cheap home to renovate in Italy sounds like the dream, but it can quickly turn nightmarish amid restrictions, red tape, and bickering relatives. Silvia Marchetti explains some of the most unexpected pitfalls and how to avoid them.

How to avoid hidden traps when buying an old property in Italy

With so many Italian towns offloading cheap old properties for sale, lots of people have been tempted by the chance to buy a fixer-upper in a sunny, rural area and live in the perfect idyll. And most are oblivious at first of what risks the purchase might entail. 

The older the properties are, the more potential traps along the way.

READ ALSO: The Italian towns launching alternatives to one-euro homes

There have been several villages in Italy eager to sell €1 and cheap homes that have had to give up on their plans once hidden issues came to light.

Back in 2014, the towns of Carrega Ligure, in Piedmont, and Lecce nei Marsi, in Abruzzo, tried hard to sell their old properties off at a bargain price but just couldn’t get past Italy’s labyrinthine red tape, hellish property restrictions, and scores of bickering relatives.

Both towns’ mayors found themselves chasing after the many heirs of unknown property owners who had emigrated in the 1800s. All existing relatives, who technically owned small parcels of the same house (whether they knew it or not), had to all agree on the sale.

Under Italian law, over time and generations a property ‘pulverizes’ into many little shares depending on how many heirs are involved (if one single heir is not named).

You can end up in a situation where you agree with two owners that you’ll buy their old house, and then one day another five knock at your door saying they never gave their consent, nullifying your purchase. So it’s always best to check beforehand the local land registry to see exactly who, and how many, are the owners, and where they are. 

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In Carrega Ligure and Lecce nei Marsi, families had long ago migrated across the world and the many heirs to some properties were impossible to track down.

But there were also other obstacles.

“We wanted to start the renovation project by selling dilapidated one euro houses, and then move on to cheap ones, but the tax office would not agree on the price – saying that the old properties had a greater value, that they weren’t classified as abandoned buildings but as perfectly livable houses in good shape”, says Lecce nei Marsi mayor Augusto Barile. 

This meant buyers would have ended up spending tons of money in property sale taxes.

“Even if these were just small houses, potential property taxes start at €700, and could have been much higher,” he explains.

“This would have been a nightmare for any buyer finding out about this at a later stage, after the purchase”.

Barile says the town hall had not made a prior agreement with the tax office to reclassify and ‘downgrade’ the value of the old buildings, which also required an update of the land registry. 

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

Council officials in the village of Carrega Ligure faced a wall of red tape when they tried to sell off abandoned properties. Credit: Comune di Carrega Ligure

Several potential buyers I spoke to back then said that when they found out about the tax office’s involvement by word of mouth (mostly thanks to village gossip at the bar while sipping an espresso), they fled immediately without even taking a look at the houses. 

The best advice in this case is to pay a visit to the local tax bureau ahead of any formal purchase deal and make sure that the old, dilapidated house you want to buy is actually ‘accatastata’ (registered) as such, or you might end up paying the same property sale taxes as you would on a new home. Hiring a tax lawyer or legal expert could be of huge help.

In Carrega Ligure, where old shepherds’ and farmers’ homes are scattered across 11 districts connecting various valleys, a few abandoned homes located near pristine woods came with a nice patch of land – which turned out to be another huge problem.

Old estates often cannot be disposed of due to ‘vincoli’ – limitations – either of environmental or historic nature, that do not allow the property to be sold, or simply due to territorial boundaries that have changed over time, particularly if the original families haven’t lived there for a long time.

READ ALSO: How Italy’s cheap homes frenzy is changing rural villages

In Carrega Ligure it turned out that “a few dwellings located in the most ancient district couldn’t be sold because of hydrogeological risks. State law forbade rebuilding them from scratch, as floods and mudslides had hit the area in the past”, says Carrega Ligure mayor Luca Silvestri.

Meanwhile, other properties were located within or close to the protected mountain park area where the village districts spread, and where there are strict rules against building to preserve the surroundings.

Another issue was that a few old homes came with a patch of land which was quite distant, on the opposite side of the hill, says Silvestri, making it inconvenient for buyers looking for a house with a back garden.

In this case, checking territorial maps, and speaking to competent bodies such as park authorities if there are ‘green restrictions’ in place, can spare future nuisances.

See more in The Local’s Italian property section.

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