Should You Rush to Buy a House in Italy Now?
The situation with COVID-19 has affected almost all countries of the world and real estate markets everywhere. Activity in the Italian market has practically stopped. Realtors in the country remain without work, and personal face-to-face viewing of houses is impossible.
Market players note the cancellation of more than 20 thousand transactions due to COVID-19 and its consequences. “Some take a break, some buyers prefer to abandon their purchase plans because someone lost their job, someone will no longer agree to provide a loan,” said Chiara Ippoliti, real estate agent in Rome.
Thus, the question for many potential investors today, especially those with sufficient financial and labor stability, is whether the economic recession in Italy will lead to a sharp drop in housing prices.
Italy's leading consulting company has studied current trends and published its results in its first report on the Italian real estate market by 2020. A research company from Bologna claims that the situation in the country's real estate market is very serious with a 30% drop in annualized sales for this first quarter. The market is expected to recover in three years, resulting in a total loss of more than 120 billion euros. The company also emphasized that in 2020 the volume of payments on mortgage loans will be reduced by 20-30 percent.
The real estate market is dependent on the level of unemployment, as local demand strongly affects the price level. At the beginning of the year, the country was expected that the unemployment rate would drop to 10 percent or less, but is now projected at 12-13 percent by 2022. This, therefore, means that there will be sharp changes in the real estate market, the number of sales of residential buildings will decrease - by 50,000-120,000 units. Prior to this, in 2020, it was expected to implement 650,000 transactions. This figure reflects the overall decline in the real estate market at a level of 8 to 18 percent.
The consulting company believes that in the near future there will be a gradual fall in prices, which amounted to 0.4 percent at the beginning of the year, and the average price for secondary real estate is now 1699 euros per square meter. In any case, the next quarter will shed more light on the situation.
Published: April 30, 2020