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23 September 2013
For months the media has repeatedly been reporting about the crisis on the Italian property market. Although a lot of the published articles furnish us with sound information and numerous statistics, one can easily get the impression that right now one can purchase property at “dumping prices” all over Italy. However, very often one does not take into account that these articles mostly refer to the situation throughout the whole country and do not make reference to any particular region – such as the Lake Garda region which, notwithstanding the crisis on the property market, continues to be very popular among buyers. A lot of prospective buyers arrive at Lake Garda with the wrong idea of how much property costs or with the expectation to excessively negotiate prices downwards. We need to take a closer look at the situation on the Italian property market in the Lake Garda region:
Since the end of 2006 the Italian property market has been in “free fall”. As one can see from a set of statistics compiled by Nomisma – a renowned Italian institute of economic research – the property sales actually effected in the whole of Italy went down from 870.000 in 2006 to 444.000 in 2012. This corresponds to a drop of almost 50 %!
Originally, the land registry office forecasted the climax of the crisis on the Italian property market for the end of 2012, follow by a stagnation of another two years, before the market would slowly pick up again from 2015 onwards.
Even though the Italian property market is still showing this downward trend in 2013, according to the Italian Tax Office this negative trend has slowed down, at least in larger cities as well as in popular regions. Even Nomisma is expecting a slight but continuous growth in the number of property sales after one last drop in the sales figures by -6 % in 2013.
However, it remains difficult to get a bank’s approval for a mortgage. Foreign banks, which are not based in Italy, are currently very reluctant to grant loans for investments in Italy. Italian properties are rated as comparatively poor by the credit institutions, and properties on Lake Garda are no exception to this rule. For this reason it is paramount to contact various credit institutions at the same time as looking for a suitable property, when one wants to fulfil one’s long cherished dream of a property at Lake Garda.
Even sales conditions have further deteriorated over the last couple of months: the average time of selling a residential property currently amounts to 8,5 months. This is an increase of 1,5 months compared to selling times one year ago.
The average reduction of the sales price on properties currently amounts to -16 %. Considering the poor sales figures this is, according to Nomisma, a comparatively small reduction. Consequently, the institute of economic research predicts a further drop in prices of at least -5 % by the end of this year.
Even though, at a first glance, these figures and information present a favourable development for prospective buyers, one should bear in mind that the negative development, which is being published in many places – something we have already mentioned – presents the situation in the whole of Italy; the Lake Garda region, nonetheless, is a very popular holiday destination. Property prices here can be compared to the prices in large cities and even in times of crisis, such as the present one, it is wishful thinking to find a property which is a real bargain.
This is confirmed by the latest statistics and observations: according to a study by Gabetti
Immobiliare the Lake Garda region is presenting almost a counter tendency to the national developments on the property market. The demand – particularly for properties on the popular eastern shore of Lake Garda – is said to be almost unbroken, in particular when looking at high quality new buildings. This statement is confirmed by the FIAIP, Italy’s biggest trade association of real estate agents: while in 2012 the whole province of Verona had to accept a negative development of -25 %, the property market on the eastern, the Veronese shore of Lake Garda went down by just -8 %. In 2013, according to the land registry office, the municipality of Peschiera del Garda could even register a positive growth of 4 % compared to the previous year!
The main reason for this rather contrasting development at Lake Garda is the differently structured group of buyers: most of the requests in the Lake Garda region are for second homes which serve as holiday homes. This group of buyers is less affected by the general economic crisis and has the financial means to invest in property.
The greatest demand, according to the land registry office, is still for two and three-room apartments with an average cost of 200.000 to 300.000 euros. Compared to this, we get an average price per square meter of currently 3.300 to 3.800 euros for properties with a view of the lake. The prices per square meter for properties in the hinterland vary a lot depending on their location and the type of property. Prices might even go down by as much as 1.200 euros. Also in great demand are “rustici” – country houses made of stone – which often, in spite of their location off the beaten track, command rather high prices.
Nonetheless, since the beginning of the year, the property crisis has become more noticeable even in the Lake Garda region. The market is stagnating, the majority of vendors is quite prepared to enter negotiations and prices have started to go down, especially during the last couple of months – even though to a far lesser extent than elsewhere. Although we can not really talk about real bargains, nevertheless prospective buyers will certainly have the opportunity to acquire properties at interesting and, most of all, fair market prices over the next few months.
(Sources: Nomisma; Agenzia delle Entrate; Il Sole 24 Ore, l’Arena.it)