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How much does it cost to raise a child in Italy?

How big is the financial commitment parents have to make in Italy to pay for their offspring’s needs and expenses until they’re grown up and independent? Here's a look at the predicted costs.

How much does it cost to raise a child in Italy?
A man pushes a pram as he walks along the Foro Traiano Roman ruins in Rome. (Photo by Vincenzo PINTO / AFP)

Family is the bedrock of Italian society, but it’s also an unbalanced economic crutch, propping up children who leave home much later than most of their European counterparts.

Various factors are at play, from a declining birth rate, youth unemployment, being unable to get on the property ladder to young Italians moving abroad in search of better financial opportunities.

It probably comes as little shock, then, that parents in Italy end up forking out huge sums of cash to support their offspring through childhood and early adulthood (and beyond).

Even just up to the age of 18, raising a child in Italy can cost upwards of €320,000, according to data from Italian consumer research body ONF (Osservatorio Nazionale Federconsumatori).

The average spend of raising a child from 0-18 years is €175,642, but it rises in families with high incomes, classed as over €70,000 per year.

READ ALSO: Italian class sizes set to shrink as population falls further

Researchers noted that the cost of bringing up children has jumped up following the effects of the pandemic too: compared to 2018, child-rearing expenses increased by 1.2 percent by 2020.

The decrease in expenditure related to transport due to spending more time at home, as well as those incurred for sports and leisure activities, was not enough to mitigate the increase in costs for housing and utilities, which increased by 12 percent compared to 2018.

Photo by Suzanne Emily O’Connor on Unsplash

Food prices rose by 8 percent compared to 2018 and education and care jumped by 6 percent for the same timeframe.

In fact, Italy ranks as the third most expensive country in the world for raising children, only coming behind South Korea and China, according to data from investment bank JEF.

The pandemic has contributed to extending an already growing phenomenon: the decrease in annual income of Italian households.

Household income dropped by 2.8 percent from 2019 to 2020, the report found, citing data from national statistics agency Istat. It marks a further squeeze for families, especially low-income and single-parent families.

Depending on earnings, the amount needed to bring up a child until the age of 18 varies considerably.

READ ALSO: ‘Kids are adored here’: What being a parent in Italy is really like

A two-parent family with an annual income of €22,500 spends an average of €118,234.15 to bring up a child until the age of 18; for the same type of family but with an average income of €34,000 per year, the total expenditure to bring up a child increases to €175,642.72.

For high-income families, stated as over €70,000 annually, raising a child costs €321,617.36 on average.

The figures mark an increase of around €5,000 for low- and middle-income families, and a much sharper rise of €50,000 for high-income families, compared to ten years ago.

The money gets spent on housing, food, clothing, health, education and ‘other’ categories. The report revealed that the average spend on a child aged 16 years old is almost €11,500 annually, amounting to €955.78 per month.

Almost €2,000 per year gets spent on food, €1,615 goes on transport and communication, €782 goes on clothing and €1,600 goes on education annually, the report found.

They begin small, yet the costs are anything but. (Photo by LOIC VENANCE / AFP)

For the ONF, “these data highlight how, today more than ever, having a child is becoming a luxury reserved for the few, which fewer and fewer Italians are able to afford.”

READ ALSO:

The numbers on supporting children after their 18th birthday are a little hazier, as when children eventually fly the nest varies – but figures from Eurostat show that Italy ranks third in Europe for the average oldest age at which children move out of the parental home, at 30.2 years old.

Only young people from Croatia and Slovakia wait longer to live independently, while the EU average for flying the nest is 26.4 years old.

Even then after eventually leaving home at over 30 years old, it’s not entirely clear how many Italians are fully independent once they get their own address, or whether their parents continue to bankroll their living costs.

Italy’s president Sergio Mattarella sent a message to Italy’s Birth Foundation (Fondazione per la Natalità) in May stating, “The demographic structure of the country suffers from serious imbalances that significantly affect the development of our society.”

In response to worsening economic circumstances, the Italian government has recently pledged to do more to help people have families and reverse Italy’s continuing declining birth rate.

It has introduced the Single Universal Allowance (L’assegno unico e universale), but along with it has dropped various so-called ‘baby bonuses’ that provided lump sums to new parents.

The new allowance is a monthly means-tested benefit for those who have children, or are about to have a child. It is payable from the seventh month of pregnancy until the child reaches the age of 18 or in some cases, 21. For more information on what it is and how to claim it, see here.

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PROPERTY

PROPERTY: How Italian mortgages are getting more expensive

Mortgage rates have been rising in Italy throughout 2022, with further increases expected. Here's how much higher repayment rates are expected to get.

PROPERTY: How Italian mortgages are getting more expensive

Average mortgage repayments in Italy are going up, meaning that people either on a variable mortgage rate or applying for a mortgage now will be paying more than they were last year.

But as mortgage rates were at a record low last summer, just how bad is the outlook really and what should homebuyers expect?

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

Interest rates have been increasing for around six months, with the situation made worse by Russia’s invasion of Ukraine, pushing up the cost of goods and services.

The European Central Bank last week announced further “significant” inflation hikes, set to further impact on the cost of living.

The ECB predicts inflation will reach 6.8 percent in 2022, before declining to 3.5 percent in 2023 and 2.1 percent in 2024. These are all higher figures than were forecast in March.

For Italian mortgages, this means a higher monthly outlay due to the knock-on effect of higher mortgage interest rates – although those already on fixed rates are protected from the currently volatile market.

New figures from Italian consumer rights association Codacons show what you can now expect to pay according to the ECB’s interest rate projections.

In the case of a 30-year variable-rate €200,000 mortgage in Rome, the total increase in repayments would be just over €16,000 in the event of a 0.50 percent increase in mortgage rates.

The monthly hike would come to just under an additional €50.

According to financial forecasts, if the increase were 0.25 percent, an instalment would go from €619 to €642, but if it were 0.50 percent – as is predicted for September – it would reach €665.

Price comparison website Facile.it also looked at what the changes will mean for monthly repayments, predicting that the variable rate will increase to over 2 percent by the end of the year.

Taking a €120,000 loan to be repaid in 20 years, today’s average variable rate is 0.85 percent, with a monthly instalment of €544.

Photo by Nils Schirmer on Unsplash

According to predictions, the variable rate will rise to around 2.2 percent by the end of 2022, meaning a higher monthly instalment of around an extra €75.

By June 2023, the variable rate is projected to rise to 2.95 percent and the mortgage instalment to increase to €663, making that an extra €120 to pay each month.

Is Italy heading for a market slowdown?

The latest figures are making homebuyers nervous.

According to a survey published by Facile.it, almost 2 million people in Italy have stopped looking for a new property due to the increase in mortgage rates.

The cost is likely to rise further following the ECB’s announcement, the report noted.

“In a period of rising rates such as the current one, choosing a mortgage becomes a more delicate operation,” stated a spokesperson.

READ ALSO: The most expensive places in Italy to buy a house in 2022

“There is no absolute right or wrong choice between fixed rate, variable rate or hybrid solutions, the decision has to be made according to the specifics of the would-be borrower: risk appetite, income, duration of financing, age, and so on. The help of an expert advisor therefore becomes more important than ever.”

After years of falling mortgage rates, researchers said fixed rates have already risen and an average mortgage fixed rate will rarely fall below 2.4 percent.

Those who choose a variable rate, on the other hand, are said to be able access lower loan repayments, which start at 0.65 percent – but, as noted, won’t stay at that level for long and are subject to market fluctuations.

Historically, it’s still a good time to get a mortgage

Although the news seems gloomy for those on variable mortgages or those applying for a mortgage now, the figures follow record low interest rates on mortgages last year.

Italian mortgage rates fell to “historic lows” last year, the Italian Banking Association (ABI) said, after a cut to interest rates by the ECB meant 

A drop in interest rates from the ECB in May last year saw mortgage interest rates in Italy fall to their lowest in a decade, with monthly repayments almost halving in that time.

It placed Italy as the European nation with the lowest fixed mortgage rate.

Even though mortgage repayments across the country this year aren’t as favourable as in 2021, it’s still a comparatively good time to take out a mortgage.

Meanwhile, the ECB has pledged to return inflation to 2 percent over the medium term, which may subsequently bring down mortgage rates in Italy too.

See more in The Local’s Italian property section.

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