Is now a good time to buy in Italy?
Without question there is more potential to negotiate on price particularly if there is a real need to sell. For example, a villa in Tuscany overlooking the sea in the Rosignano Marittima area where the owners, now in their 80s and looking to downsize, were willing to accept an offer 20% under the asking price of €2,500,000. Or a more modest property on the hills above Lake Como, bought a year ago for around €370,000 with the same again spent on restoration now being sold for around €450,000. But, although there are good opportunities if you know where to look, vendors are not prepared to sell for silly money because real estate is where the Italians tend to invest most of their capital.
Where is it a good time to buy?
Buy quality in locations with historic appeal; the days when buying an estate in Tuscany for pocket money are long gone, but what Italy does have are quality locations which may not offer the short term return of a castle in the remotest nook of eastern Europe, but they do have great long term appeal and hence stability in terms of value. The Venice label is world-famous and cannot be reproduced. A villa on Lake Como isn’t going to be cheap even now, but buy there and you buy something unique, and something that will have held its value when it’s time to sell. These are the type of locations that I’m convinced are only going to become more valuable as time goes on; they form part of Italy’s heritage and are limited in number.
Despite good discounts in some sectors of the property market, the Italian scenario should not be confused with the situation in other European countries. The Italian residential market has gradually been slowing since 2007 with properties taking longer to sell and discounts of up to 10-15% on offer. After 10 years of constant growth this was expected to continue for at least a further 12-18 months if not longer, even before the recent global crisis. However the way the Italian market is responding to the current economic scenario sets it apart from others, prices are moving in the buyer’s favour but not to the same degree as other European markets such as Spain.
While the number of sales is down there are no massive drops in price, this is especially true in the second home market, where properties are often bought as investment and those looking to sell prefer to withdraw from the market and sit it out, rather than drop the asking price significantly. Even at the top end of the market the actual number of sales has decreased, yet a property with a certain appeal is still in demand, and demand still greater than supply. Currently the best bargains are towards the lower end of the market in what the Italians term prima casa, the best discounts are to be found on new builds. Nomisma, the Italian market watcher, predicts a fall of 3-5% in real terms, yet these huge discounts cannot be expected on top end villas in Tuscany or the historic palazzi of Venice, these long established markets remain particularly stable.
However, even if the financial crisis is having repercussions in the industry, there is still optimism for the long term, especially as bricks and mortar are traditionally the place where Italians salt away their capital, as they say ‘Il mattone è il mattone’ translated as ‘the brick is the brick.’ For example, in 2003 when Parmalat, the Italian dairy and food company collapsed in the corporate fraud scandal, many investors moved capital out of the stock market into real estate, a move that led to price rises.
Positively, Lake Como and the lesser known Lake Iseo are statistically still witnessing price rises +1.5% and 5.6% respectively, despite the exposure Lake Como has had in recent years. The historic villas around Cernobbio, Laglio, Moltrasio and Carnate Urio are much sought after by overseas purchasers, whereas on Lake Iseo foreign buyers are going for farmhouses on the hills overlooking the lake.
On the other hand Lake Maggiore saw an overall drop in prices in the same period of 3% but with Berlusconi opting to buy there recently instead of Como and Brad Pitt and Angelina Jolie rumored to be planning a purchase, the lake may see its status rise.