Home property prices have been falling for the eighth straight year in Italy, with real estate brokers welcoming the drop.
Claudio Parenti, one of the heads of the biggest property brokerage firms in Italy, Tecnocasa, said “I hope prices will stagnate or even keep falling”. He is hopeful of the increase in property transactions in face of lower mortgage costs and easier credit conditions.
Deals on home prices have no worth whatsoever if there is a mismatch between asking prices and spending prowess of consumers. The current decline on property prices has now paved a way towards matching supply and demand in the Italian market.
Transactions on home ownerships, have finally reached optimistic numbers, ever since the double recessions hit Italy in 2008. Declining home prices have now leveled against household spending powers. Tecnocasa predicts an increase to 500,000 in about a quarter this year, compared to 800,000 in 2006 when the market was at its peak.
There was a decline of 3% in the Q1 figures in the past year, according to the tax-revenue agency of Italy. Though, situations have since looked up, transactions increased by 7.1% in the last quarter of 2014, the most growth since 2006.
The director general of the economic research agency Nomisma, Luca Dondi said, “A further fall in property prices is needed for a general improvement in the market”. Home prices need to fall by another 5% to 10% to create a continuous recovery in the real estate market. Declining prices would mean monthly mortgage payments become affordable when compared to earnings.
Claudio Parenti, one of the heads of the biggest property brokerage firms in Italy, Tecnocasa, said “I hope prices will stagnate or even keep falling”. He is hopeful of the increase in property transactions in face of lower mortgage costs and easier credit conditions.
Deals on home prices have no worth whatsoever if there is a mismatch between asking prices and spending prowess of consumers. The current decline on property prices has now paved a way towards matching supply and demand in the Italian market.
Transactions on home ownerships, have finally reached optimistic numbers, ever since the double recessions hit Italy in 2008. Declining home prices have now leveled against household spending powers. Tecnocasa predicts an increase to 500,000 in about a quarter this year, compared to 800,000 in 2006 when the market was at its peak.
There was a decline of 3% in the Q1 figures in the past year, according to the tax-revenue agency of Italy. Though, situations have since looked up, transactions increased by 7.1% in the last quarter of 2014, the most growth since 2006.
The director general of the economic research agency Nomisma, Luca Dondi said, “A further fall in property prices is needed for a general improvement in the market”. Home prices need to fall by another 5% to 10% to create a continuous recovery in the real estate market. Declining prices would mean monthly mortgage payments become affordable when compared to earnings.
Long Slide
Declining price rates of Italian homes have now extended, to an average rate of 16.3% from the high of 2008. All values, except inflation rates, have fallen every year since the peak rates of 2008.
In the month of April, applications for residential mortgage leaped by 71.9%, since last year’s figures, credit adviser CRIF said in a report. Houses bought on mortgage clauses amounted to 65% of total properties bought compared to 62.7% figures from last year.
Fitch Ratings published a report last week highlighting its predictions for real estate prices in the Italian market. Prices are expected to fall 20% lower than their pre-recession numbers. According to the report, “Regulatory uncertainty, slow economic recovery and high unemployment curb the supply and demand for home-acquisition loans”.
In the years before the financial crisis, values had risen sharply to bring stagnation to the market. Post-recession, values declined to boost home-buying to a certain extent. Recession caused banks to increase loan rates and decrease mortgage lending, that harmed the property market incredibly.
According to the European Central Bank data, as banks lowered mortgage rates and eased lending regulations (loan rates fell to 2.95), the market started showing signs of recovery.
In the month of April, applications for residential mortgage leaped by 71.9%, since last year’s figures, credit adviser CRIF said in a report. Houses bought on mortgage clauses amounted to 65% of total properties bought compared to 62.7% figures from last year.
Fitch Ratings published a report last week highlighting its predictions for real estate prices in the Italian market. Prices are expected to fall 20% lower than their pre-recession numbers. According to the report, “Regulatory uncertainty, slow economic recovery and high unemployment curb the supply and demand for home-acquisition loans”.
In the years before the financial crisis, values had risen sharply to bring stagnation to the market. Post-recession, values declined to boost home-buying to a certain extent. Recession caused banks to increase loan rates and decrease mortgage lending, that harmed the property market incredibly.
According to the European Central Bank data, as banks lowered mortgage rates and eased lending regulations (loan rates fell to 2.95), the market started showing signs of recovery.
Lenders Awaken
Italy’s banking association ABI last week has quoted a total of 11.3 billion Euros in mortgage lending, a rise of 55% in numbers since last year. UniCredit SpA, Intesa SanPaolo SpA, BNP Paribas SA’s BNL unit; all constitute Italy’s largest lending group.
Tecnocasa’s Claudio Parenti has stated that, focus on economic and political stability, would lead to gradual recovery of Italy’s property market.
The Italian economy is slowly recovering from its post-recession slump. The GDP report for the months of January to February has reported positive growth in construction investments.
Even though predictions have painted a positive outlook, the market has been facing mixed responses. Business and consumer confidence in future recovery of market has been low, according to the May 28th report by Istat.
References:
http://www.bloomberg.com/news/articles/2015-06-04/italian-brokers-cheer-home-price-drop-that-brings-rebound-closer
Tecnocasa’s Claudio Parenti has stated that, focus on economic and political stability, would lead to gradual recovery of Italy’s property market.
The Italian economy is slowly recovering from its post-recession slump. The GDP report for the months of January to February has reported positive growth in construction investments.
Even though predictions have painted a positive outlook, the market has been facing mixed responses. Business and consumer confidence in future recovery of market has been low, according to the May 28th report by Istat.
References:
http://www.bloomberg.com/news/articles/2015-06-04/italian-brokers-cheer-home-price-drop-that-brings-rebound-closer
