Property: rising prices in Italy?

Property is always a favourite topic in my Blogs and whilst I profess to know very little about the property market itself, other than that which I can see with my own eyes and hear about other people's experiences, it does appear that the Italian property market is seeing a 'Rialzo'. 

The Facts

 

According to the Agenzia delle Entrate, in the first trimester of 2016, sales of houses in Italy have increased 20.6% on the previous year. The actual number is 115135 homes that passed through the hands of vendors to buyers. 

 

The trend is still positive when we include shops, magazzini, and offices, at 17%.

 

The geographical divide of property sales are also quite interesting in that the North saw a 24% rise in sales.  This is important because 50% of total Italian property sales occur in the Northern region of Italy. The centre saw an increase of 18.5% and the South saw an increase of 16%. 

 

I am Nostradamus

 

Now, I don't think I can predict the future, but a couple of years ago I did say to my wife that 2015/2016 would be the year to purchase property in Italy and would more than likely mark a 'bottoming out' in the property market.   

My rationale was based on nothing more than observation and a little human behavioural psychology. (my wife is a psychologist!)

The EU

The EU is everyone's favourite subject at the moment, but it's actions lead me to believe that a resurgence in the property market has started and will continue, all be it slowly. The effect will be more pronounced in cities rather than rural areas. 

If we look at recent history from the US and the UK, we can see that in the light of the financial crisis of 2008 both countries started to follow central banks policies of quantitative easing. In essence they started to bail out the banks who could then get back to their job of lending again. 

This lending reared its ugly head in the property market and prices started to rise again, creating, in effect, another property bubble. This is now starting to slow in both the US and UK. Rising interest rates and inflation (when they happen) will be a hugely negative effect on house prices in the future and we cannot discount an unexpected turn in this direction either. 

The EU, being the slow moving beast it is, jumped on the quantitative easing programme very late in the game, assisted by the creative ideas of Mario Draghi, and in fact the EU only started the process in March 2015. The process is not exactly the same as the US and the UK due to EU constitutional restrictions, but in effect it should, and is, having the same effect. Euro money is flowing into asset price inflation, of which property is a major benefactor.

How this will play out in Italy is anyone's guess but my prediction is that like two rollercoaster cars, one following the other round a track, that as the first car rides into the dip the second will not be far behind, equally as the first car makes the slow ride to the top again the second car will also do the same. Watch this space!