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Knight Frank: latest report on Italy’s second-home market

Knight Frank analizes the Italy’s second-home market

Knight Frank’s new Italy Insight report assesses what impact the country’s recent economic challenges have had on its prime property market.

Traditional sources of demand (US, UK buyers) while still evident are now joined by other HNWIs looking to make a lifestyle purchase, these include Scandinavian buyers (particularly Danes), Russian and Benelux nationals who are all increasing their market share.

As well as providing an economic update and analysis of Italy’s mainstream and prime markets, the insight report assesses what impact Prime Minister Monti’s IMU property tax will have on prime sales and ncludes a snapshot of current market conditions across Italy’s second-home hotspots: Rome, Venice, Tuscany and Umbria, Liguria, Sardinia and the Italian Lakes.

Unlike the UK, US, Ireland or Spain, Italy did not experience a housing market bubble prior to the financial crisis. Although official data reports that mainstream prices are only 10.5% lower than their peak in Q2 2008, most analysts acknowledge that mainstream prices have dropped by around 30% over this period.

For many international buyers, Italy’s established prime locations offer a more secure second home option without the risk that many emerging European markets present.

A weaker euro in the first half of 2012 made very little difference to the volumes of sales but interest from non-Eurozone buyers improved once the euro reached 1.20 against the pound.
Buyers from the UK, US, Belgium, Denmark, the Netherlands and Russia are the most active. The one issue that connects these buyers is their level
of wealth, many are increasingly internationally-mobile with multiple residences globally.

In late 2011 Mario Monti’s new government of technocrats embarked on a strict austerity programme. For the first time Italians now have to pay tax on all their properties, including their primary residence. The IMU tax, which also applies to non-resident second-home owners, is expected
to raise €10bn in 2012 but many Italians consider it to be unfair given it is based on a public register which relies on an outdated ‘cadastral’ rental value for each home.
We do not expect the IMU tax to have a significant impact on Italy’s luxury housing market for two reasons. Firstly, because the sums remain
relatively small. Homeowners are due to pay 0.4% of the cadastral value on a primary residence and up to 1.06% on a second home. Secondly, despite the IMU tax changes Italy’s purchase costs and annual property charges continue to compare favourably with some of Europe’s other prime second-home destinations.

Key findings

  • Enquiries for homes above €3m are strong, along with demand for properties in new developments priced below €1m
  • Italian prime property has performed better than its mainstream counterpart. Although prices have fallen by c.20% since their peak in 2008 the market is now gaining traction
  • A weaker euro in the first half of 2012 had little impact on sales volumes but has provoked interest from non-Eurozone buyers
  • The introduction of the IMU tax by Mario Monti, although a complex tax, is likely to have little impact on the luxury homes market

Focus on Liguria

The prime market in Liguria has seen a higher level of activity in 2012. New stock being brought to the market is not only of good quality but is
being realistically priced. In contrast to some of Italy’s other prime markets Liguria has seen prices hold firm with small price rises observed in the best locations such as Portofino, Bordighera and Alassio.
British, Danish, Swiss, French and Russian buyers are the most prevalent with many seeking homes within the €500,000 to €1.5m price bracket. Above this threshold the region finds itself competing with the neighbouring Côte d’Azur.

Click here to read the full version of the Italy Insight by Knight Frank

Fonte: Kate Everett-Allen, International Residential Research, Knight Frank – Oct 2012

To know more about Knight Frank please visit www.knightfrank.com or call Mr. Matteo Scandolera on +39 334 9323000 or come to our head office in Liguria: LiguriaHomes, Via Matteotti n. 24, San Remo – Western Liguria

What Knight Frank says about the luxury Italian housing market?

What Knight Frank Report says about the luxury Italian housing market?

This report summarises the key market trends observable in the luxury Italian housing market. The report provides expert insight from our international network, highlights recent market performance, buyer demand and features a selection of prime properties being marketed by Knight Frank.

The global downturn led to a renewed interest in core markets like Italy with international buyers returning from their searches in less established locations. Now is an opportune time for those seeking the dream property and lifestyle that only Italy can provide.

Italy’s most desirable regions continue to attract international lifestyle buyers searching for their dream holiday home. Buyers primarily come from the UK, Italy, Scandinavia, Germany, Russia and Benelux countries. US buyers have returned to the market but only tentatively due to their unfavourable exchange rate.

Although the global economic downturn saw prices in parts of the country fall by around 20%, there have been few forced sales, and where vendors have been realistic in setting prices, properties are selling in reasonable timeframes. The top end of the market (€5m-plus) has been slow in comparison, with buyers in this range being more cautious than others on price.

Italy is still widely considered to be a strong, established, core market.

The first half of 2011 is likely to see relative price stability across the regions with the potential for a slight decline. The only vendors to experience significant price falls will be those who have not yet reduced their asking prices.

Italy is a myriad of destinations, each with their own unique charm and character.

Buyers are predominantly driven by their desired lifestyle – they seek the long-term enjoyment of a second home rather than a short-term investment opportunity.
For them, the importance lies in the architecture, the climate, the al fresco culture, the food and wine, the bustling cities and wonderful vistas. The country also represents a safe and trusted destination with good transport links and a solid infrastructure.
Buyer interest was reinvigorated on the back of the global recession, as those searching in less established locations turned to what are seen as the trusted core markets, such as Italy.

Transaction volumes increased in 2010 as buyer confidence returned. Buyers do however remain price-sensitive as a result of the large number of properties available in most areas.
Many vendors now understand the need to be realistic on price. But buyers should not expect to find many ‘fire sales’, merely pricing that reflects the current market.

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(from: Knight Frank)

Demand for homes in Liguria is reaching an all time high among foreign buyers. The competition for Ligurian properties is driving prices up, and attracting homeowners who will spare no expense in finding the perfect Italian getaway.

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