The Italian property market is slow but agents expect it to improve in the future. This is the result of a survey by Banca d’Italia (Italy’s central bank) in association with Tecnoborsa.
The two bodies polled some 929 estate agents across the country to examine the state of the national property market. The results, which refer to the first quarter of 2009, are predictable—the market is weak, sale numbers have gone down by 5% over the end of 2008 and prices too are starting to drop. The difference in the number of agents who saw prices falling against those who thought they were rising grew to 59.9% (against 54.8% at the end of 2008). This trend was particularly marked in North-Eastern Italy, which other studies also identified as one of the worst hit by the property downturn.
However, 42% of the surveyed agents reported an increase in new instructions, against 24% who talked of a decrease. What is stifling sales, then, is not lack of stock, but a gulf in buyers and sellers’ expectations. Properties don’t sell either because purchasers believe the asking price is too high and don’t bother putting in an offer, or because vendors deem the offers too low. And on the occasions when a mutually acceptable sale price is agreed, credit restrictions create a further stumbling block, according to the survey respondents. In a scenario where the vast majority of buyers is mortgage-dependent, the banks’ ultra-prudent attitude can cause a sale to collapse.
Nonetheless, agents are more positive than in the past about the market’s future prospects. More than 50% of the respondents believe market conditions are now normal, and those who believe they are unfavourable are just 7% more than those who believe they are favourable (27.7% against 20.8%). Last year, by contrast more than 76% of agents believed the market to be unfavourable, 18% found it normal and only 5.3% thought it favourable.
Respondents also report that sale times are stable at 6.6 months and while the jury is out over prices—47.6% expect a further reduction while 49.7% think they’ll remain the same—the majority thinks the second quarter of 2009 will be better than the first. Last year, by contrast, some 60.8% of agents thought that the first quarter of 2009 would be worse than the last quarter of 2008.
The Banca d’Italia report doesn’t explain the reasons for this cautious optimism, but considering that many agents think prices will either drop or remain stable, they probably believe the gap between buyers and sellers’ expectations will become smaller.
Prospects for the medium term are even more optimistic—65.6% of the respondents think the market will be better than it currently is.
