Should You Invest?
The property market in Italy is well established and attracts
large numbers of investors keen to enjoy a slice of the beauty and
passion that the country has become so famous for.
- Well established economy.
- Strong tourist rental market.
- Potential capital growth in the south.
- Guaranteed rental for four years.
- No capital gains tax if you sell after 5 years of
ownership.
- There is neither inheritance nor gift tax in Italy.
Rental Yields
Italian rental yields are low at around 4.5%. Apartments in the
historical centre of Rome yield 3.1% - 5.3%, while similar
apartments in cosmopolitan Milan yield 4% - 5.6%. Apartments in
Venice fetch 3.8% - 4.8% gross yields while similar apartments in
Florence yield a higher return, ranging from 4.8% - 5.8%.
If the property is to be let as a Holiday home, it is unlikely
that it will be rented all year round. It would therefore work to
your advantage not to overestimate the income or rely on it
totally. However, if the property will be rented to a single
tenant, you will have a guaranteed income for four years.
Price History
The housing market has been in an upswing since 1997, after a
long period of recession in the mid 1990s. House prices have
appreciated by 90% (57% in real terms) from 1998 to 2006.
The recent slowdown of house price growth is largely attributed to
the increase in mortgage rates. Households are sensitive to minor
changes in interest rates because about 87% of mortgage loans are
floating or fixed for only one year and less than 10% are fixed for
ten years or more. From its record low of 3.47% in September 2005,
the mortgage interest rate for one year fixed loans rose up to
4.93% in Feb 2007.
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