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The crisis of real estate is not over yet. More transactions but at prices are unchanged

05 October, Il Tempo

The trend of the Italian property market. After having plummeted in the past years, the market seems to have stabilised, but it’s still far from a recovery. Istat reports that in the second quarter of 2018 the prices of the transacted houses, investments included, have increased by 0.8% from the last three quarters, while they have decreased by 0.2% compared to the same period of 2017. This negative trend has slowed down compared to the -0.5% of the previous quarter. However, if we compare the figures with those of 2010, property prices in the second quarter of 2018 have decreased by 15.8%. According to Istat, such a reduction concerns only existing houses, whose prices have dropped by 22.1%, while new homes have registered a 0.8% increase. If residential transactions are recovering with a yearly increase of 5.6%, as reported by the Revenue Agency, the market seems to appreciate new construction.

The second quarter of 2018 confirms this trend. In the last three months, the price increase has also concerned existing properties, which have increased by 0.7%, but new houses have grown at more than double the rate, 1.7%.

However, we must remind that the results of the first quarter of 2018 were negative for new houses (-1.6%). On average, property prices in the first quarter of 2018 have decreased by 0.4% in comparison with the same period of 2017. The weight of new construction in the general Istat index is equal to approximately one-fifth, having increased by 1.3% while existing properties have decreased by 0.9%.

The new figures by Istat on the property market are alarming. In one year, prices for existing houses have further decreased by 0.7%, with some dramatic slumps such as -2.2% in Rome, where even new construction decreased (-5.5%). Due to the introduction of the Imu tax and the Tasi tax bringing the total taxation on properties to 150 billion this year, the prices for existing houses have reduced by 22.1%. In addition, there are also the many properties with no value as they’re impossible to sell or to rent”, commented Giorgio Spaziani Testa, Confedilizia president. And he adds: “We must solve the cause that brought to this anomaly in the Italian market which is mainly represented by the disproportionate taxation”.

Source: Il Tempo

Translator: Cristina Ambrosi