Scenari Immobiliari president Mario Breglia believes the Italian property market will be slightly better in 2009, with a contraction at the lower end but an increase in activity at the medium to upper end
The worst is over. This is the message coming from Mario Breglia, president of Italian property intelligence company Scenari Immobiliari.
Breglia has a video blog on Italian mortgage website www.mutuiaconfronto.com and, in the latest instalment, he presents his take on the state of the Italian property market.
“The 2008 market is ending a bit badly,” he says, mentioning the 15% drop in sales volumes across Italy and the ensuing price decrease of about 5% experienced over the last twelve months.
But the market dynamics are far more intricate than this topline picture suggests. The lower end of the market is the one that is really suffering because the rise in interest rates, coupled the banks’ stricter approach to lending, makes it hard for people to afford and obtain and mortgage.
“Bear in mind that to purchase a €250,000 home today, you need at least €100,000 cash deposit, and that’s not easy,” says Breglia.
This segment will continue to flag throughout 2009, which is why Breglia’s overall forecast for next year remains negative. However, he says, the worst is over. “I believe that the greatest part of the [crisis’] negative impact is behind us,” he says This is partly because, while the bottom end struggles, the medium to high end of the market is alive and well.
There are plenty of good opportunities out there for buyers who can afford to spend up to €700,000 to €1 million, and only need a mortgage to fund a small part of the purchase, according to Breglia. This segment is improving“with considerable margins for further improvement” next year.
These two trends—a contracting lower end market and an expanding upper end one—will consolidate in 2009. As a result, “when you look at the overall numbers, the balance for 2009 is negative. But this is really a double speed market—and it is likely to remain like this for a long time.”
In any case, Breglia concludes, “the situation in Italy is definitely better than what has taken place in other countries such as the US, the UK and, at least in part, Germany. And this gives us hope for the next twelve months.”
