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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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For members

TAXES

Tax deadline nears for second-home owners in Italy

Tax season begins in Italy in mid-June, with the first deadline coming up this month for those who own a second home in the country.

Tax deadline nears for second-home owners in Italy

June 16th is the first property tax deadline of the year that all owners of a second home in Italy, regardless of their nationality or residency status, need to know about

The main property tax in Italy, known as Imposta Municipale Unica (IMU) in fact applies to all residential or commercial property and land, although not to primary residences (barring some exceptions).

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

Generally, you don’t pay this tax if your main residence is in Italy and you live in the country more than six months a year.

But if it’s your second home, you will be liable to pay this tax.

The June deadline is for the first instalment, with the other payment due by December 16th.

How much?

Taxes on second homes are inherently higher than primary residences – or at least, a main home qualifies for certain types of tax relief that second homes can’t benefit from.

How much you pay depends on your property and the area you live in: payments are based on a percentage of the property value, collected by the municipality where your home is located, with part of the tax also going to the national government.

READ ALSO: Can second-home owners get an Italian residence permit?

As a rough guide, you’ll need to take 5 percent of the property value and then multiply that number by a coefficient – a figure that changes according to property type.

This will give you a taxable base and from there you’ll be charged anything from 0.4 to 1.06 percent of that figure, depending on the municipality where your second home is located.

If that sounds complicated, that’s because unfortunately it is.

You can use this handy online IMU calculator from property website Idealista to get an idea of how much you may need to pay.

For the most accurate calculation though you will likely want to speak to a tax professional.

How do you pay?

You pay your IMU using the F24 tax form, and an online payment service is now available via the Italian tax agency’s website here

Otherwise, you can make the payment using the F24 form via bank branches and post offices or have an authorised person (such as an accountant or tax consultant) submit it for you.

Please note The Local cannot advise on specific cases. See more in The Local’s property section here.

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