Abstract:Italian mortgage reports suggest that growth in the mortgage market has been quite noticeable in the country. The real estate market in Italy mostly has dwellings, which are occupied by the landlords more than the tenants. This proves that the number of ownership establishments are on the rise and there is a shrinkage in the rental market in the country.
The article throws light on some of the aspects of the Italian mortgage market. Italian mortgage market has shown remarkable growth in the last couple of years. There has also been growth in the price of houses in Italy. Conversely, the mortgage interest rates have subsided.
The housing market in Italy has been manifesting an upward trend after 1997. Italy had a short stint with recession during the 1990s. Between the years 1998-2006, appreciation of house prices were 90%, which in real terms is 57%. Price index pertaining to 13 metropolitan areas increased by 6.3% by 2006 end.
This was 4.2% in real terms. The rate at which the price of houses has been increasing in Italy has slowed down dramatically. This is due to the rise in mortgage rates.
Italian mortgage rates:Approximately, 87% of mortgage loans are either fixed or floating for a period of one year. 10% or less mortgage loans are fixed for a period of more than 10 years.
Italy's rental market:The rental market in Italy has been spiraling inwards. The percentage of owner occupied establishments were 74% in the year 1993. Reports reveal that in the year 2003, owner occupancy of establishment was 83%. This was the highest registered in the European Union or EU. The number of rental occupancy declined to 16% from 25% during 2003 and 1993 respectively.
There has been exemption in the capital gains tax as well as the mortgage interest. The increase in house prices during the period 1999-2006 was 8.1%. In contrast to this rents increased by a meager 2.7% as compared to the 2.8% increase during the year 2004.
Yield from rentals in Italy ranged between 3% to 5%. It was observed in places like Rome, rent yield was 3.7% to 5.3%. On the other hand, yield from rent in areas like Florence was 4.8% to 5.8%.
Although the price of houses has been escalating but the rate of growth is not as rapid as it used to be.