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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

PROPERTY: Should you hire a renovation agency for your Italian home?

If you're renovating a home in Italy, will you need to pay a middleman to cut through the red tape and language barriers? Silvia Marchetti looks at the pros and cons.

PROPERTY: Should you hire a renovation agency for your Italian home?

The idea of snapping up a cheap, crumbling house in a picturesque Italian village may sound appealing – but doing so always comes with tedious paperwork and the hassle of renovation.

For this reason, a growing number of professional agencies have sprung up in Italy to cater to foreign buyers snapping up cheap homes amid the property frenzy.

In many of the Italian towns selling one-euro or cheap homes, there are now ‘restyle experts’ and agencies that offer renovation services handling everything that could become a nightmare: from dealing with the paperwork and fiscal issues to finding a notary for the deed, contracting an architect, surveyor, a building team and the right suppliers for the furniture.

They also handle the sometimes tricky task of reactivating utilities in properties that have been abandoned for decades.

I’ve travelled to many of these villages and looked at this side of the business, too. Hiring these ‘middle people’ comes with pros and cons, though the positive aspects can certainly outweigh the negatives – provided you’re careful to pick the right professionals. 

READ ALSO: Why Italians aren’t snatching up their country’s one-euro homes

These intermediaries are usually locals who have expertise in real estate and a good list of suppliers’ contacts. This allows them to deliver turnkey homes that were once just heaps of decaying rubble, sparing buyers time and money – particularly those living abroad, who then aren’t forced to fly over to Italy countless times a year to follow the work in progress.

I’ve met several buyers from abroad who purchased cheap homes sight unseen after merely looking at photos posted online by local authorities, but then had to book many expensive long-haul flights to hire the architect, get the paperwork done, and select the construction team (a few even got stuck here during Covid).

Thanks to their contacts the local agents can ensure fast-track renovations are completed within 2-4 months, which could prove very useful as the ‘superbonus’ frenzy in Italy has caused a builder shortage meaning many people renovating property now face long delays

Photo by TIZIANA FABI / AFP

Their all-inclusive commission usually starts at 5 percent of the total cost of a renovation, or at 2.500 euros per house independently from its cost and dimension. The fee also depends on the type of work being carried out, how tailored it is and whether there are any specific requirements, like installing an indoor elevator or having furniture pieces shipped from the mainland if it happens to be a Sicilian or Sardinian village. 

However, buyers must always be careful. It is highly recommended to make sure the local authorities know who these agents are and how reliable they are in delivering results.

Town halls can often suggest which local companies to contact, and this gives the renovation legitimacy in my view. In a small village, where everyone knows each other, when the town hall recommends an agency there’s always a certain degree of trust involved and agents know that their credibility is at stake (and also future commissions by more clients). 

Word of mouth among foreign buyers is a powerful tool; it can be positive or detrimental for the agency if a restyle isn’t done the right way, or with too many problems.

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

So it’s best to avoid agencies from another village, even if nearby, who come to you offering fast and super-cheap services, or local agencies that are not suggested by the mayor’s office. 

Then of course there can be other downsides, which largely depend on how ‘controlling’ and demanding the client is. 

For those not based in Italy full-time, the most important consideration is: how much can you trust these professionals to deliver what you expect, exactly how you want it, without having to be constantly on the ground? 

Photo by Philippe HUGUEN / AFP

Language can be a major obstacle. There are technical building terms that prove difficult to translate, and if the local agency doesn’t have English-speaking renovation professionals with a track record in following foreign clients it’s best to look for an intermediary with a greater language proficiency. 

I remember meeting an American couple once who got lost in translation with a village agent for days, and had to hire a translator just to hire the intermediary.

It’s always useful to ask for a ‘preventivo’ (quote) with VAT indication, considering roughly how much inflation could make the final cost go up. Buyers should also sign a contract with the exact timeframe of the works and delivery date of the new home, including penalties if there are delays on the part of the agency. 

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But, even when there is complete trust, I think it is impossible to fully restyle an old home from a distance, contacting intermediaries by phone, emails, messages or video calls only. 

Details are key and there’s always something that could be misinterpreted. Buyers based overseas should still follow-up the renovation phases personally, perhaps with one or two flights per year to check all is going well and up to schedule.

Asking to see the costs so far undertaken midway through the restyle is useful to make sure there are no hidden costs or unexpected third parties involved – like buying the most expensive furniture or marble floor when not requested, or hiring a carpenter to build artisan beds.

While there is really no such thing as a hassle-free renovation, these agencies can ease the pressure and do most of the burdensome work – but buyers’ supervision will always be needed.

Read more in The Local’s Italian property section.

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