According to the index published jointly by the Bank of Italy (BoI) and the national statistics institute (Istat), House prices in H1 2009 rose by 3% from a year earlier, when adjusted for inflation, house prices rose by 1.9%. House prices rose by an average of 6.5% p.a. (4.1% in real terms) from 2003 to 2006, then by an average 4.6% p.a. (2% in real terms) from 2007 to 2008.
However, Italy's resilience may not last for long as the GDP is expected to contract by as much as 5.5% after shrinking 1% in 2008. Unemployment is anticipated to rise to 10.7% by the end of 2010, from 6.8% in 2008. Nomisma said that Property prices are expected to drop by 7% to 8% and Housing sales are also expected to contract a further 8% to 10%. Nomisma expects the property market to stabilize in 2011.
Italy's mortgage markets are smaller than those in other European countries and this is the reason average housing mortgage loan rates in Italy fell to 3.64% in June 2009, after the ECB eased monetary conditions, the effect of interest rate reductions is likely to be small, since most households rely on personal savings for home purchases.
Jelena Cvjetkovic of Savills confirmed to Countrylife that the cost of property in the country had held firm in comparison to its European neighbors, which have faced severe financial difficulties. She said that In the main coastal and mountain areas, the drop in transactions was moderate and prices fell by only five to ten per cent on average compared to 2008, confirming the passion for holidays in Italy and quality of lifestyle.
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