According to EU statistics, property prices across the Continent rose on average by 4.3% in 2017, as property markets continue to recover from the downturn. However, this this has not been the trend in Italy where prices have fallen by .8% in 2018, compared to 2017. Some towns, such as Milan, northern Italy's industrial powerhouse, saw prices rally at the end of 2018. Bologna, a student town with a large demand for rented accommodation also saw stable prices but generally property prices fell across the country.
A slowdown in the Italian economy and concerns over job security have made locals reluctant to buy property, and if they do, it is often for work related reasons, a house or apartment in Milan or Turin for example. But that is not the only reason and understanding what motivates the Italian buyer will help explain why the current market provides such an excellent opportunity for the foreign buyer.
What Motivates Buyers
Let's take a stone farmhouse for an example (we could equally use a village houses or apartments by the sea). The farmhouse comes with a barn and couple of acres of surrounding land, a typical property that attracts foreign buyers to Italy. A buyer may be moving to Italy permanently, or it could be a second home. Renovation may be an option to put a personal stamp on it. Your Italian home is a lifestyle choice, a place to get away from it all and enjoy the dolce vita. And If the property is rented when not in use and earns income, all even better!
An Italian looking at the same house may find the property attractive but will also see it also as a drain on resources that serves no purpose. It is also true that an Italian from Le Marche is unlikely to buy a country house in Piemonte, and vice versa, as Italians usually return to their home town or village if they invest in a second home. Although many no longer do as there has been a shift away from the countryside to the towns for work, so even if a property is inherited - the family home in the village - they are reticent to maintain the expense or renovate a property they are unlikely to use. Furthermore, second homes for Italians attract local taxes whereas a first home does not - good news for all the foreign first time buyers.
What does this mean for the foreign buyer?
A vast number of properties that have the "typical characteristics" are currently available but hold little interest for Italians and will remain unsold. The law of supply and demand dictates prices will fall which is brilliant news for foreign buyers as these are exactly the type of houses that appeal, and as there is more flexibility on location, the choice is even greater.
Italian vendors are aware foreign buyers offer the best hope of securing a sale and are currently offering unprecedented discounts in order to close the deal. Some offer vendor finance which is a good way to obtain a non-status mortgage, although the traditional mortgage route is still available: foreign buyers who can borrow up to 60% LTV at an interest rate that is on the floor. One last point about finance - nailing down an FX rate in advance is always advisable to avoid volatility in the money markets and allows you to budget for your purchase with confidence.
There is always something..
Other issues will always affect the market. A classic example is Brexit, but after the dust has settled UK citizens will still be able to buy Italian property just like other non-EU citizens do every year. You may have personal reasons for holding you back or hope the FX rate improves but be warned - there is no time like the present to purchase a home in Italy.
Where are the hotspots in 2019?
Le Marche has been included in the Forbes Magazine list of best places in the world to retire, and it is true Le Marche is popular with second home buyers. A renovated Italian farmhouse or coastal apartment can provide good rental income. In the hills of Le Marche, real estate is less expensive, and a three bedroom farmhouse with land and panoramic views of the Sibillini mountains will sell for about 130,000 Euros.
Emilia Romagna borders on Tuscany and Liguria, yet Italian property for sale can be up to 30-50% lower for a similar property. An attractive stone farmhouse in a panoramic position coming with hectares of land can be bought for under 150,000 Euro. The excellent infrastructure of the region means that you are never more than an hour from Bologna with an international airport, the art towns of Ravenna, Modena and Parma or the sandy beaches of Rimini on the Adriatic coast.
Piemonte offers value for money properties in a region of mountains, vineyards and olive groves. Many houses for sale in Piemonte come with vineyards, and stone barns that are ideal for conversion into a guest annex, or used as B&B accommodation. A high influx of tourists visiting the area seeking self-catering holiday accommodation makes Piemonte an interesting proposition for investors.
Puglia houses with sea views are constantly in demand and southern Italy is also attractive for its property prices, lower than in the north of Italy. Two bedroom houses for sale in Brindisi, ready to live-in, start at around 60-70,000 Euro. Villas with sea views and pools on the Puglia coastline are plentiful and will attract excellent rental income from the thriving tourist market.
Check out the properties below to see what each region has to offer.
Contact us, we are very happy to discuss your search requirements and suggest properties that match.