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Property Prices

Italy - Property Prices

Italy is a land of home-owners; more than 80% of the residential properties are occupied by people who own them. The real estate market in this peninsula boomed in the 1980s because of a high demand in second homes from locals and foreigners. Things have changed significantly since recession affected the country in the 1990s. However, the Italian real estate industry didn’t get hit as bad as some of the other European nations.

Property prices in the country have been falling for more than five years now though the decline has been relatively slow since early 2014. The fall in the house price index in the latter half of 2013 was around 6.5% and approximately 7.5% when adjusted for inflation. Italian real estate experts believe that this trend will continue for at least another two to three years. A recovery in the housing prices is also expected in another 5 years or so. This is therefore the right time for expats to invest in the Italian property market.

Property prices in some parts of the country are much higher as compared to the others. Places like Venice, Milan, and Rome have always been more expensive while Tuscany has only seen a considerable hike in real estate prices for the last decade.

Tuscany is one of the costliest regions when it comes to housing, mainly because of its popularity with expats. This region is known for its rich culture and beautiful landscape. Florence, Volterra, Sienna and Chiantishire in Tuscany have some of the most expensive rural property in Europe. A centrally located 2-bedroom apartment in Florence goes for around €220,000 (£175,000 or US$290,000). In Chiantishire, the starting cost of a farmhouse that has 3 bedrooms, a garden and a pool is about €1,070,000 (£850,000 or US$1,410,000). Some of the larger villas with additional amenities can cost more than 3 times as much. Fortunately, Tuscany isn’t expensive everywhere. A small village house in the mountainous regions north of Lucca costs just under €100,000 (£79,400 or US$131,800). In the same area, a good-size country home can be bought for about €250,000 (£198,000 or US$330,000).

Property in the well-developed cities of Italy, like Rome (Lazio), Venice (Veneto) and Milan (Lombardy), also comes at a much higher price. A compact 3-bedroom apartment in any of these places usually costs around €400,000 (£318,000 or US$527,000). The rate in prime locations is €8,000 (£6,300 or US$11,000) per square meter. In the suburbs, the rate may range between €1,500 (£1,200 or US$2,000) and €5,000 (£4,000 or US$6,600) per square meter. In these cities, garages and parking space are usually sold separately for approximately €25,000 (£19,800 or US$33,000) and €12,000 (£9,500 or US$15,800) respectively.

The real estate market in Amalfi Coast, Campania is also on the steeper side as a number of wealthy expats have chosen to settle down or buy a second home here. A two-bedroom house costs close to €1,000,000 (£794,000 or US$1,318,000). Some expats recover their investment in a short span of time by renting the property to tourists.

As the common expat locations become less affordable many foreign investors are now turning to Umbria, often referred to as Tuscany’s little sister. This region is characterized by its historical communes like Assisi, Amelia, Todi, Castiglione de Lago, Citta di Castello, Spoleto, Narni, Orvieto, Gubbio and Norcia. A 3-bedroom house in one of the villages can be as affordable as €200,000 (£159,000 or US$263,000) and a country house of the same size will cost double that amount. This region also has several luxury villas on the market, which can be quite expensive.

Some of the other areas that expats find quite attractive in terms of pricing are Abruzzo, Puglia (Ostuni), Le Marche, Molise, Sicily and Sardinia (Cianciana).

Not all expats get the expected return on their investment when they purchase a property in Italy. As the real estate market has been on a decline for a while many of them make no profit when they try to sell their property after a few years. Rent controls and other similar restrictions have also made private renting an unfeasible option for Italian landlords. According to a recent research, the property yields in Italy usually range from 2.8% to 4.6%. Studies indicate that smaller apartments have better yields, especially if they are located in the heart of the city.

There is no particular trend which indicates that expats pay more for purchasing property in Italy than the locals do. However, some sellers bring down their asking price by a bit in order to secure a sale.

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