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PROPERTY

What’s the state of Italy’s property market in summer 2024?

High mortgage rates and an unwillingness on the part of lenders to finance home loans is leading to a contraction in Italy's housing market, even as prices rise.

Published: 1 July 2024 15:54 CEST
What's the state of Italy's property market in summer 2024?
Housing sales have declined in Italy in 2023 and 2024. Photo by Johan Mouchet on Unsplash

Italy’s housing prices have steadily risen since 2020, in large part thanks to the rising values of new builds in the country.

But while property values continue to rise in Italy’s major cities in particular, the total number of sales dropped in 2023 – a trend that appears to be continuing into 2024, as predicted by experts at the start of the year.

Housing sales declined by around 10 percent in Italy in 2023, according to the market intelligence firm Nomisma’s March 2024 Real Estate Market Observatory, with around 710,000 homes sold over the course of the year.

At the same time, the country’s rental market increased by three percentage points, meaning around 48,000 more households turned to renting.

That’s a direct result of soaring inflation and high mortgage interest rates, the firm says.

Italy’s gap between wage growth and inflation currently stands at around seven percent, making banks reluctant to lend at affordable rates (though average rates did decrease slightly for the first time in two years at the start of 2024).

READ ALSO: Is now a good time to buy a home in Italy?

The total amount of capital made available by lenders for mortgage financing in Italy dropped by around 26 percent between 2022 and 2023, while mortgage-less property purchases increased by 4.8 percent.

Nomisma forecasts a further decline in housing sales over the next few years, predicting residential sales of 695,000 in 2024, 689,000 in 2025 and 682,000 in 2026.

Meanwhile, a recent analysis by Corriere della Sera newspaper of data from real estate portal Immobiliare.it shows that property values in eight major Italian cities rose slightly between 2023 and 2024.

The average price of a house in Milan, where housing costs were highest, increased by 3.1 percent to €432,000.

Prices in Florence (€340,000) saw a yearly increase of 2.8 percent; in Rome (€269,000), 1.3 percent; and in Bologna (€277,000), 3.4 percent.

READ ALSO: Can I get a mortgage in Italy as a foreigner?

In Naples, where prices average €229,000, there was a 4.2 percent annual increase between 2023 and 2024; in Turin (€160,000), 3.9 percent; and in Genoa (€135,000), 3 percent.

Palermo saw the highest rate of increase at 5.9 percent, though the average house price remained the lowest of all eight cities, at €116,000.

Although Italian property values are continuing to marginally increase in nominal terms – at an average rate of 1.5 percent last year – Nomisma notes that when accounting for inflation, prices in fact saw a real terms drop of 3.9 percent in 2023.

At the same time, Corriere says, Italy’s available housing stock is increasing, in part because of the EU’s ‘Green Homes’ directive, which requires property owners to make their homes more energy efficient starting in 2030 – driving many homeowners to sell rather than fork out for expensive renovations.

This could mean that Italy’s property prices could soon start to drop off; though unless this is accompanied by a willingness by banks to start lending to would-be buyers at affordable rates, it’s unlikely to result in a sudden boom in house sales.

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MONEY

What insurance is available for owners of holiday lets in Italy?

Protecting yourself and your property against unforeseen events may well be your top priority when renting out your second home in Italy – but there’s no one-size-fits-all insurance plan for owners.

Published: 2 July 2024 15:55 CEST
What insurance is available for owners of holiday lets in Italy?

If you own a second home in Italy and you’re planning on renting it out to holidaymakers when you’re not there, taking out an insurance policy to protect yourself and your property against unforeseen events is one of the first and most important things you’ll have to consider. 

Though contracting an insurance policy on a holiday let is not a requirement in Italy except in some specific cases (see more below), doing so is strongly advisable. 

Even the most mindful and considerate of guests can sometimes cause accidental damage to your property or belongings during their stay, especially if they happen to have small children or pets.

But taking out an insurance plan can also protect you from expensive claims made against you by guests in the event of injuries or damage suffered while in the property.

Though insurance policies for vacation rentals are grouped together under the umbrella term of assicurazione casa vacanze (holiday home insurance), there’s no one-size-fits-all plan and homeowners are granted the freedom to tailor their policies to their particular needs, as well as the features of their property.

Third-party liability coverage 

The polizza di responsabilità civile (literally, ‘civil responsibility policy’) is considered the most basic type of plan you can take out on your second home. 

This covers the costs associated with injury or damage suffered by guests during their stay in your property as well as any legal defence expenses you may face. 

A view of Alberobello, a village famous for its traditional 'trulli' houses in Puglia

A view of Alberobello, a village famous for its traditional ‘trulli’ houses in Puglia. Photo by Piero CRUCIATTI / AFP

To make a practical example, if a bookshelf in your home suddenly collapses, injuring one of the guests, this policy will cover the medical expenses faced by the guest as well as the costs of any legal proceedings you may be involved in.

READ ALSO: Is now a good time to buy a home in Italy?

It’s worth noting here that if you’re renting out your property through popular online platforms such as Airbnb, your home will in most cases be automatically covered by a liability policy managed directly by the platform. 

For instance, Airbnb has its own AirCover policy, which offers homeowners free-of-charge third-party liability coverage for claims of up to one million dollars.

That said, most platform-managed liability policies will only apply to bookings made directly through the platform, meaning that if you rent your property via any other channel, you’ll have to take out a separate plan. 

The cost of a basic responsabilità civile plan generally hovers around 150 to 200 euros per year.

Is a third-party liability plan mandatory?

Under Italy’s tourism laws, a liability insurance policy is only mandatory if you rent out your property as part of an ‘entrepreneurial activity’, meaning a registered business with a partita IVA (VAT number).

If you’re a private citizen occasionally renting out your second home to partly offset property costs and this is not your main professional occupation and source of income, you won’t be required to take out a liability policy (though you may still consider getting one for the reasons explained above).

If you have doubts on whether or not your activity qualifies as ‘entrepreneurial’, you’re advised to get in touch with a legal expert.

Damage insurance 

A basic liability policy won’t protect you against damage to your own property or belongings, which is why homeowners tend to complement this with a damage policy (assicurazione danni). 

This essentially covers the costs of material damage suffered by your property’s structure and contents, whether that be caused by guests or external factors. These can include fires, explosions, leakage, clogged drain pipes, burglary and vandalism acts depending on the type of plan you choose.

It’s worth noting that standard assicurazioni danni don’t generally cover damage caused by major natural disasters such as earthquakes and flooding.

Hoses pump water out of a building in Venice following a severe high tide event.

Hoses pump water out of a building in Venice following a severe high tide event. Photo by Filippo MONTEFORTE / AFP

If your property’s located in an at-risk area, most insurance providers will allow you to add natural disaster coverage to their damage plans.

READ ALSO: Reader question: Should I insure my Italian home against flood or earthquake damage?

Third-party liability coverage and damage coverage against the most common types of external factors are often sold as part of a single insurance package marketed as assicurazione multirischio (multi-risk insurance). Here, prices range from 200-250 euros per year for the most basic plans to 600-700 euros for more comprehensive plans.

Once again, if you’re renting out your property through some of the more popular online platforms, your home will in most cases be automatically covered by some type of damage policy managed directly by the platform. 

For instance Airbnb’s AirCover policy covers damage of up to 3 million dollars caused directly by guests (but does not cover damage caused by external factors).

Theft

Many standard insurance packages already provide coverage against theft. If that’s not your case, you can ask for an assicurazione furto (theft insurance) to be added to your plan.

However, this type of coverage only applies to break-ins (furto con scasso) and not to theft on the part of guests.

The presence of a short-term rental agreement (either signed in physical form or implicitly agreed upon via an online platform) between owner and guests makes it impossible under Italian law to consider acts of theft from guests as theft per se as these can only be categorised as misappropriation (appropriazione indebita).

To protect yourself against misappropriation, you can add a polizza di tutela legale (legal protection policy) to your package. This will cover legal expenses in a lawsuit for misappropriation filed against a guest. 

Picking the right provider 

It’s advisable to do at least some level of in-depth online research when choosing your second home insurance plan in Italy as there are nearly 100 different providers across the country.

Also, as appealing as it may be, simply opting for the cheapest coverage on the market may mean that you don’t get the product that’s right for you or your property.

READ ALSO: Five expensive mistakes to avoid when buying a house in Italy

When picking your insurance provider, it’s advisable to check customer reviews, feedback scores, and ratings beforehand, as well as enquire about the claims process and cancellation policies with the relevant company. 

Some providers also offer discounts or incentives for homeowners improving home safety measures or eliminating risk factors.

All forms of insurance in Italy are regulated by the Italian Insurance Supervisory Authority (IVASS). Make sure that the provider you turn to figures on the IVASS register. 

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