Italy, a country with pricy property which's falling in price

You can’t refer Italy to countries with cheap real estate: it is extremely difficult to buy a decent accommodation at a price below €1,200 per sq.m. At the same time, you can’t help identifying Italy as a country with cheapening housing, and moreover, as a country with bad prospects. It perfectly neighbors Spain and Greece, although it seems that things on the Apennines are going on better.

Quite similar situation as in Italy is in France. In both countries prices are scattered unevenly across regions, they are decreasing almost everywhere, and it seems like there is no end to this trend. For some people it will be a good chance to buy a house in Calabria (here they cost €1,200 per sq.m – the cheapest in Italy), and somebody will seize the chance to buy a property in Liguria (here it is almost three times more expensive: €3,400 per sq.m, Italian maximum).

Vernazza, Liguria

Bright spots on a gray canvas

Last year property prices in Italy have shown almost a record decline compared to markets of other countries. According to some estimates, things were even worse than in Spain. According to results of 2013 you can buy real estate in Italy 5.9% cheaper, but according to results of all recent crisis - by 12.2% (for Spain it is 5.3% and 30% respectively). According to the portal idealista.it, prices fell by 8% by the last quarter of 2013.

Demand is falling too. 905,000 properties (-8.9%) were sold in Italy, including 403,100 houses and apartments (-9.2%) - less than in 1985. If you look at the situation in big cities, there are much less sales in Naples, Genoa, Turin, Rome and Palermo. Demand for houses and apartments proved to be steadier in Milan and Bologna.

City	Sales in 2013	In % to 2012
Rome	23,819	-7.3%
Milan	15,140	+3.4%
Turin	8,585	-8.2%
Naples	5,585	-15.2%
Genoa	4,643	-10.3%
Palermo	3,736	-7%
Bologna	3,645	+1.5%

Source: idealista.it

Procida, Campania

But there are bright spots on this canvas: Savills reports that last year the volume of investments in commercial real estate in Italy increased by 137%, i.e. more than twice, up to €4 billion. Mostly foreign investors, who "have regained confidence in the quality of political and economic prospects of Italy", were the reason of such progress.

However, this growth is quite illusory, because it is due to the low base effect: in 2011 investments in Italy were slightly less than €4 billion, and in 2012 they fell abruptly. So, the market regained its position two years on.

Bologna, Emilia-Romagna

80% of Italian property fell in prices

Residential real estate prices dropped in nearly all regions of the country. According to immobiliare.it only in the last three months, from November to February, in some regions prices decreased by €10-15, and in some - even €70 per sq.m. Among the latter there are the most attractive places - Liguria and Sardinia. Piedmont (Turin), Lombardy (Milan) and the capital region Lazio also had a drop in prices.

For a quarter of a year, only 4 of the 20 regions became less affordable: Valle d'Aosta (€3,343 per sq.m, +€45), Umbria (€1,590, +€9), Campania (€2,352, +€6) and Veneto (€1,931, +€5).

Venice, Veneto

The fall in prices particularly heavily affected expensive housing market in 2013. KnightFrank believe that luxury property in Sardinia, Umbria and Milan fell by 10%, the worst result not only in Europe but also in the world. Luxury accommodation in Tuscany (-4%), Florence (-2%) and Lake Como (-2%) costs a bit cheaper than before. Rome has no changes (0%), and only Venice and the Ligurian coast (+3%) will cost a little more. Another couple of white brush strokes on the Italian portrait.

Well, perhaps it is due to strong demand for luxury real estate in Liguria. As you know, rich foreigners, including the Russians show interest to this very shore which is considered to be an equivalent replacement to the French Riviera.

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"Russians buy at the sea, not in major cities"
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"Russian clients prefer to buy property at the sea for summer and off-season holidays," says Irina Alexandrova, founder of Kalinka Immobiliare Srl agency. "Few people purchase in major cities such as Milan, Rome, Florence."

In Liguria prices per square meter can reach €5,300 as in Cervo, and €6,600, as in Alassio. If you do decide to move away from the traditional choice in favor of the sea, then in Milan you can base on prices from €2,500 per sq.m on the outskirts and up to €6,000-7,000 in the center; in Rome - from €3,500 up to €7,000-8,000; in Florence - from €3,000 up to €4,000-5,000.

However, buying an apartment in a big city of Italy for renting it out is not the most profitable thing. As noted by Colordarcy, "2.56% per annum in the capital, Rome, will not even cover your expenses."

Portofino, Liguria

And yet it is gray: the prices will continue to fall

In the nearest future purchase of real estate in Italy is recommended only for those who are in love with this country and want to go and live there at all accounts. In 2014 prices will continue to fall.

Fitch experts believe you can expect reduction of prices by 3%. Mortgage debt will increase. Time will be needed for the overall improvement of the economy to have enough time to reflect on the real estate market. The Economist believes that with regard to income of population housing is overvalued by 10%.

Irina Alexandrova says that "there is hope that the real estate market in Italy will begin to grow with the appointment of new prime minister Matteo Renzi and provided that all the reforms that he plans will work". However "negative trends in Forte dei Marmi - the traditional resting place of rich Russians in Tuscany, and in Sardinia, are as before: the Russians are actively leaving these places, because these two areas are strongly overvalued."