Average property prices in Italy increased again in the first quarter of 2022, despite the soaring cost of living fuelled by high inflation.

Italian house prices rose by 1.7 percent compared to the previous quarter – a 4.6 percent rise compared to the same period last year, according to data from Italy’s national statistics institute Istat.

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The increase in prices covers both new properties and existing homes.

The cost of new homes rose by five percent, which marks a slight slowing down of growth from the 5.3 percent increase in the previous quarter.

Homes already on the market, which account for 80 percent of those included in Istat’s House Price Index, rose from a 3.7 percent increase in the last quarter of 2021 to 4.5 percent in the months of January to March of this year.

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Until the end of 2019, Italy had been one of the only countries in the European Union recording stagnation and decline in property prices.

Industry experts said at the time that average property prices in the country were being weighed down by the high number of old, neglected properties on the market which were proving difficult to sell.

Since the third quarter of that year, house prices have been experiencing an upswing.

The introduction of Italy’s ‘110% building bonus’ as part of the post-pandemic economic recovery plan is one of the reasons for growing interest in the purchase of old buildings in need of serious work.

And also since 2019, a growing number of Italy’s remote towns and villages have famously begun selling off old, crumbling houses for the symbolic price of one euro.

“These trends are taking place against a backdrop of persistent and lively growth in buying and selling,” writes Istat, noting a 12 percent year-on-year price increase in the residential sector, as recorded by Italy’s Inland Revenue’s (Agenzia delle Entrate).

However, although the figures may spark optimism for Italy’s property sector, they don’t take into account events that took place in the second quarter of 2022, such as the European Central Bank’s inflation hikes.

This is among one of the reasons mortgage prices are rising in Italy, which may subsequently impact the upward trend in Italian house prices for the second quarter of 2022 and beyond.

Earlier this month, surveys showed that the higher monthly repayments due to the increase in mortgage rates had caused some two million people in Italy to abandon their property search.

See more in The Local’s Italian property section.