The colorful houses in Positano, a village on Italy’s southeastern Amalfi coast, are usually a draw for foreign tourists, but not in July 2020, when this photo was taken.
FILIPPO MONTEFORTE / AFP via Getty Images
Sell Toronto, buy Tuscany. Or Sicily or Lombardy or Puglia or anywhere else in Italy.
Over the past 20 years, house prices have soared in much of the Western world, especially in Canada, but have barely moved in Italy, according to official data. They rose slightly last year, even as COVID-19 hit the country, but were flat for five years and fell by more than 10.
Many foreigners dream of owning property in Italy. Given the high – even outrageous – prices in cities like Toronto, where homes in the desired area routinely cost hundreds of thousands of dollars over the asking price, selling high in Canada and buying low in Italy is sure to tempt many Italians.
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Just don’t expect to make any money on your Italian investment. The dire economic and demographic forces working against the state suggest that a near-term property turnover seems unlikely even though Italian banks are now offering mortgages at 1 percent, or less.
Italy has been in an almost permanent recession since the 2008-09 financial crisis GDP shrank 9 percent in 2020, after becoming the first country in the world to enter into a full lockdown.
Meanwhile, Italy’s fertility rate is one of the lowest in the world, at 1.3 children per woman. In 2019, the number of registered deaths was 647,000, 54 percent greater than the number of births. In the year of 2020’s fatal pandemic, the gap is widening. The result is an overall population decline of nearly 400,000, the equivalent of a city the size of Florence, partly due to emigration as young people seek employment opportunities abroad. Only the largest cities – Rome (population 4.3 million), Milan, Naples, and Turin Palermo – barely survived.
OECD data show Canada has become the hottest property market in the world, and Italy the coldest. In Canada, real (inflation-adjusted) house prices increased 168.4 percent in the 20 years to last year. In Italy, the figure is only 7.3 percent. The next closest rival at the bottom is Germany, with a 30.8 percent gain.
ISTAT, Italy’s statistical agency, reported that house prices rose 1.9 percent in 2020 – a particularly strong figure given the country’s poor performance – but down 15 percent since 2010.
Housing markets in other major European economies fared much better, according to Eurostat, the European Union’s statistical agency. In Germany, prices are up 9.5 percent in 2020; in France 5.9 percent; and in Spain 2.8 percent. Figures for the UK for 2020 are not available, but all indications suggest that a post-Brexit buying frenzy is on the way, with house prices hitting a record. in April when the tax breaks on purchases and the lowest interest rates worked wonders. Homes outside London are increasing at the fastest pace as remote work takes off.
In general, prices for urban and rural property in Italy are very low by Canadian big city standards. They may retaliate lower, at least in tourism-dependent cities, as an abundance of vacant Airbnb properties pushed into the rental and sales market. Foreign tourist arrivals fell 60 percent in 2020, said the World Travel & Tourism Council, pushing many Airbnb owners into financial trouble.
The Demographia 2021 International Housing Affordability Report shows a number of metropolitan cities are deteriorating, with Canada now holding two of the top five rankings. We compare what your money buys in Canada, and how far abroad.
Roma property agent Alessandra Puglisi, whose family runs the Re / Max Prodigy agency in the city’s historic center, said high-end properties are maintaining their value, even rising, but the mid-market is under pressure. “Anyone who has to sell faces a lower price,” he told me.
Luxury properties in Rome seem like a bargain by international standards – all the more so given the relatively low cost of condos and property taxes.
Ms. Puglisi showed me a preliminary list of new three-story villas, which cover 500 square meters (nearly 5,400 square feet) next to Villa Doria Pamphilj, Rome’s largest park, just outside the city center. It comes with a swimming pool, Turkish bath, large terraced garden, three fireplaces, solar panels, floor heating and a standby power generator.
The expected price is around 2.7 million euros, or $ 4-million. An equivalent property in London, Paris or Berlin might do to be 50 percent higher
Non-millionaire bargain hunters have plenty of options if they are looking for rural Italy property, due to depopulation. Cities and villages are pretty much everywhere, but especially in Mezzogiorno, the southern part of Italy (starting roughly from Rome), can become a quarter to half empty. In 2016, the Italian environmental group Legambiente said that around 2,500 villages across Italy were threatened with extinction.
Lots of dilapidated little gems from the Middle Ages, Renaissance or Baroque that the mayor solicits for buyers. “The prices for some of the beautiful villas are very low compared to the US,” said Brook Edinger, an American friend of mine who has lived in Rome for three years.
The main square of the medieval hill town of Montepulciano in Tuscany.
MIGUEL MEDINA / AFP via Getty Images
Multiple cities and regions attract all stops. Dozens of cities have joined the “Case a 1 euro” initiative – homes for 1 euro -, in which vacant or abandoned property is awarded for the price of a cappuccino as long as the new owners agree to renovate the premises, generating local work, within a few years. Some city councils offer renovation grants worth thousands of euros.
Extreme variations of this concept have seen the Molise region, a region of high unemployment in south-central Italy stretching from the Apennine mountains to the Adriatic Sea, paying newcomers 700 euros a month for up to three years if they move to one. of the 106 uninhabited villages. The catch? You’ll only qualify if you start a business – not an easy task when the streets are empty of customers.
Other initiatives will see Italy’s pandemic recovery plan, supported by more than 200 billion euros in grants and loans from the European Union, linking rural areas to high-speed broadband networks. With the pandemic still strong in place, the idea is to turn as many cities as possible into remote work hot spots.
This concept may appeal to young, tech-savvy entrepreneurs who cannot afford property in big cities, despite the fact that small, remote, and lifeless cities are unlikely to benefit. Those on a railway line fairly close to the city, and equipped with several lively bars and restaurants, will be the main beneficiaries. Ghost town status awaits most of the rest of rural Italy, and giveaway prices will become the norm.
Buying real estate for the first time means dealing with a whole new set of terms and acronyms. Below are some explanations for some of the most common things buyers may encounter. Globe and Mail
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