“Homeowners’ wealth is now largely virtual” in Italy. So said Andrea Guarise, founder and managing director of Algebria Capital, in what is effectively a warning to Italians, a people notoriously very ‘attached’ to property investment. And this is not only about the main home, considered the key asset to own: 15% of us also own a second dwelling.
The asset and risk management company, which is active in the valuation of real estate investment projects, observes that the trend was a winning one until the 2008 crisis. From then on prices began to fall, while taxation on owned property has remained very high.
“Despite the abolition of the Tasi on the main home, taxation on property in our country continues to be 30% higher than in 2011”, Massimo Blasoni, president of the Centro Studi ImpresaLavoro (a research centre), pointed out to the newspaper Il Giornale on 23 August.
In 2008 alone, property transactions in Italy collapsed by 14%. All this while the value of homes kept falling: as Linkiesta writes, “in the third quarter of 2016 the values recorded in the euro area rose by 3.4% compared with the third quarter of 2015, and Italy, together with Cyprus, is the only country to have recorded a decline, albeit a modest one of 0.9%”.
Why are house prices falling? For Guarise the reasoning is simple: “who do I sell the house to if nobody is buying? And if I choose to keep it, who do I put in it who will pay me a high rent? If I leave it empty instead, I pay a lot of taxes on it. Paradoxically, it is more convenient to put refugees in it. Either way, the house no longer appreciates in value“.
“The average Italian – Guarise comments – used to invest in bricks and mortar because it was something tangible – Guarise continues -, the product of a mainstream way of thinking that told small owners that property would always appreciate and that one could make something by reselling it”.
For many Italians, with wages not keeping pace with inflation and an economic recovery that is slow to arrive, it would be more advisable to invest in movable assets, which allow greater flexibility and potentially higher returns as well, rather than committing to a long-term mortgage.
Source: http://www.wallstreetitalia.com/possedere-una-casa-e-diventata-una-ricchezza-virtuale/
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