Property sale volumes saw a greater drop in Italian provinces than in the provincial capitals, and in the North more than in the South. Florence and Venice were the two best performing cities
The global economic slowdown is helping to push along some subtle changes in the Italian property market.
The latest report by the Agenzia del Territorio—Italy’s equivalent of the Land Registry—shows that the credit crunch has had a moderate impact on Italy. Residential sale volumes have declined by an average 14.1% between the third quarter of 2008 and the same period on the previous year. This is a greater drop than those recorded by any other property sector in Italy (commercial, offices, productive) but it is still smaller than what experienced in many other developed countries.
However, the crisis has sped up some gentle but significant changes. For the first time since 2001, the property market in Italy’s many small comuni is slower than that of the provincial capitals.
The decline in sale volumes was steeper in the non-capital comuni (down by 16%) than in the provincial capitals (down 9.3%). This is particularly true of Italy’s ten largest cities and their provinces— sales contracted by an average 8.9% across Rome, Milan, Turin, Genoa, Naples, Florence, Palermo, Bologna, Venice and Catania, but went down by a much bigger 16.7% in their respective provinces.
This reverses the trend of provincial growth recorded across Italy between 2000 and 2006. However, the international financial crisis appears to have accelerated, rather than engendered this new dynamics—the Agenzia del Territorio reports that the slowdown in the provinces had already seen a gentle start in 2005.
But the Italian market is also seeing different speeds across wider geographical aggregations. The North of Italy—traditionally the country’s economic engine—is suffering more than the South, with average drops in sale volumes of 16.1%. The South, by contrast, only saw a 10.3% decline, and the Centre sat between the two, with an average reduction of 13.3%.
Looking at the two trends together, it emerges that the provinces of the North are the worst hit (with a 17.9% drop) followed by those in the Centre (-17.3%) and in the South (-11.1%). Then come the North’s provincial capitals (-10.7%) and the Centre’s (-8.3%) while sales are healthiest in the Southern capitals (-7.8%).
That said, the two best performing markets in the third quarter of 2008 were in the North and Centre of Italy—Florence and Venice (immediately followed by Naples). Both Venice and Florence recorded an year-on-year increase in transaction volumes (4.2% in the former and a staggering 23.2% in the latter), although this positive figure could be linked to the administrative recording of earlier sales of some state-owned properties.
When considering a longer time period (sales for quarters one to three of 2008 against quarter one to three of 2007) both cities saw a decline (of 2% in Florence and 11% in Venice). Even so, they remained the best markets in Italy.
