Living la dolce vita as Italy nabs the top spot

Interest in Italy from visitors to TheMoveChannel.com has soared over the last month, and the country has climbed three places to claim pole position in our Top of the Props chart.The Italian housing market has been in an upswing since 1997, after a long period of recession in the mid 1990s. House prices have appreciated by 73% (48.5% taking inflation into account) from 1998 to 2007.

Although growth did slow last year, the market is still flying high and is currently witnessing its ninth consecutive year of growth, say analysts Amberlamb.com.

The country has seen a £20 billion increase in the value of its real estate market over the last six years.

In 2003 the country saw growth of 10.6% in average house prices, followed by 8.7 and 7.1% growth in 2004 and 2005 respectively, followed by 6.3% last year.

“Last year the market still supported overall capital appreciation and many experts are predicting that, while the rate of growth has slowed, the fundamentals are in place for there to be a chance of growth for at least the next two years,” said Rhiannon Williamson, Director of Amberlamb.

The top five most requested and visited regions in terms of property buying were Liguria, Tuscany, Northern Lakes, Puglia and Umbria, according to Homes in Italy, a property sales service.

Liguria attracted the most overseas buyers, thanks to the picturesque beauty of its little villages, proximity to France and presence of nearby Nice and Geno airports.

It may well be the most expensive region but Tuscany offers a rich combination of landscape, art, history, food, and wine. Property in the north of the region, around Bagni di Lucca, is still affordable.

The Northern Lakes continue to be of interest as proximity to northern Cities and skiing appeal to buyers. Puglia, bursting with traditional properties at low prices, remains sought after.

Umbria is also a region that still attracts strong demand and has a broad range of properties on the market.

Dan Johnson, Director of TheMoveChannel.com, said, “Properties in Italy are particularly appealing to overseas buyers as there are a lot of dilapidated farmhouses crying out for renovation. In certain parts of the country, such as Sardinia, there are zones in which Government grants can be awarded to renovate a property,” he added.

So, whilst perennial hotspots such as Rome, Venice, Tuscany and Florence remain as sought after as ever, there are also a number of more affordable areas growing in popularity, such as Calabria and Ancona, both of which are now being served by cheap flight operators.

“Targeting up-and-coming areas is more popular with those seeking an affordable entry point and decent and realistic capital growth and rental yield opportunity,” added Ms Williamson.

The large property segment is dominated by foreign buyers, according to the Italian Federation of Professional Estate Agents. Nevertheless, small houses (up to 60 sq. m.) are the most requested by buyers, with 80.9% of the market.

Medium sized properties (60 to 120 sq. m.) follow (14.7% of all requests). Large properties (over 120 sq. m.) account for only 4.4% of buyers’ requests.

The least visited regions in Italy were Veneto, Trentino, Piemonte, Emilia Romagna and Le Marche.

Janet Veillon of House Around Sardinia summed up Italy’s attractions to investors, “Other countries may have beautiful beaches and great weather but only Italy has the Italian culture,” she says. “Italy is very traditional in its food, religion, family values and relaxed way of life. Unique cities such as Rome, Venice and Florence will always pull in the tourists as will the beautiful mountains, countryside and splendid coast with some of the best beaches worldwide. Foreigners just love Italy and the Italian way of life and that’s why it’s a good investment - it will never go out of fashion,” adds Ms Veillon.

Mortgages

The slowing of house price rises is largely attributable to higher mortgage rates. Italian households are sensitive to minor changes in interest rates, because about 87% of mortgage loans are floating or fixed for only one year; less than 10% is fixed for ten years or more.

From the low of 3.47% in September 2005, the mortgage interest rate for one year fixed loans rose to 5.48% in December 2007.

The economy performed modestly in 2007, with 1.7% GDP growth, still higher than the average growth rate of 0.9% from 2001 to 2006. It is expected that Italy’s economy will expand at an annual rate of around 1% during the two years 2008-09.

Inflation was 1.9% in 2007, down from 2.2% in 2006. Consumer inflation is expected to be slightly over 2.5% in the middle of 2008, dropping to around 2% towards the end of the year.

The unemployment rate declined to 6.8% in 2007, from 7.1% in 2006. Real wages rose by 2.6%, after an average of 2.2% annual wage increase from 2001 to 2006.

Other risers and fallers

Spain was a non-mover, retaining its position at number 8. France lost its top spot to the new numero uno, Italy. In a surprise move, Brazil climbed a massive 6 places to take bronze. New to the top ten were Bulgaria and India, ranking 9th and 10th respectively.

To view opportunities in the Italian property market please visit: http://italy.themovechannel.com/