Prices are holding up well for luxury property in some of the most desirable regions of Italy.
Although the country has suffered from the shockwaves of the eurozone sovereign debt crisis, the top end of the market with homes valued at €3 million or more has escaped almost unscathed.
The middle classes have felt the real financial squeeze as homes costing €450,000 to €1 million are more likely to need financing – and the banks have virtually shut up shop on mortgage lending.
Much of this market is in areas much beloved by expats – like Tuscany, Umbria and Florence.
Nevertheless prices have slumped by almost a third over recent years.
Brit expats top buyers
“Nonetheless, there remains strong demand for development products below €1 million and 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,” said Kate Everett-Allen, from global property consultant Knight Frank’s international research team.
“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.”
The survey revealed that buyers from Britain, the US, Belgium, Denmark, the Netherlands and Russia are the most active in Italy.
“The one issue that connects these buyers is their level of wealth, many are increasingly internationally mobile with multiple residences globally,’ said Everett-Allen.
Mansion tax hits corporate buyers
Italy’s IMU mansion tax introduced as part of the government’s austerity measures is not expected to deter wealthy buyers. The tax applies to resident and non-resident homeowners.
Homebuyers sheltering in a corporate structure should speak to their financial advisers as the tax may leave them open to higher taxes.
“We do not expect the IMU tax to have a significant impact on Italy’s luxury housing market for two reasons. Firstly, the sums remain relatively small. Home owners 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,” said Everett-Allen.