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Italy's real estate market keeps recovering despite uncertain economic context

Italy's real estate market keeps recovering despite uncertain economic context

ROME, July 19 (Xinhua): Italy's real estate market kept recovering in 2018 and in the first part of 2019 despite an uncertain domestic economic context, according to an annual report unveiled on Thursday. "The precariousness of the domestic economic situation does not seem to jeopardize the ability to rebound of the real estate sector, which has been laboriously recovering its lost positions after being hit by an hard crisis," said the Real Estate Market Report issued by Nomisma, an independent economic research institute. The report recalled the real estate market began recovering in 2014, although timidly, after suffering one of the worst recessions in decades. The latest positive signals were due to "both a further expansion of transactions and a gradual improvement in all of the sector's major economic indicators." According to data, the real estate market recorded 691,000 transactions in 2018 against about 598,000 in 2017. The housing component accounted for some 84 percent of total transactions last year, and this "confirms Italy's trend, according to which well over half of houses purchased are to be used as primary residence," according to Nomisma analysts. "The households' demand has remained strong (in 2018), and there was a widespread support by banks for access to credit, which has been crucial for the recovery," Luca Dondi, Nomisma Managing Director, told Xinhua. People aged between 18 and 35 years represented a large portion (29.4 percent of total) of all those purchasing a house in 2018, the report also showed. Such phenomenon was seen as quite interesting, considering the high youth unemployment rate in Italy (at 30.5 percent in May) and the contract precariousness affecting young workers on the job market. Furthermore, the report registered a reduction in the average length of transactions to sell and buy a house, and a modest increase (0.2 percent) in average selling prices. Both factors "help outline an image of strength of the real estate market, thus serving as pulling factors, and especially for the investment component of the real estate market," Dondi explained. According to the Bologna-based research institute, the reversal in selling prices "truly represents the element of potential strengthening for the favourable trend." "After 11 years of constant price dropping, this trend reversal -although very limited, and modest in terms of growth - could positively influence the market, and especially investors," the managing director explained. However, Dondi specified the positive price trend will need to be confirmed in the second half 2019, since several uncertainties at Italy's macroeconomic level might affect the real estate market. As for more geographical insights, the report stated that "the growth was mainly driven by the (growth registered in) provincial capitals in the north-east of the country." Adding to this overall trend, Genoa in the northwest coast and central Bologna registered the highest annual increase in sales volume in 2018, respectively 15.2 percent and 12.9 percent. They were followed by Rome and the country's major financial hub, Milan, both of which saw a boost in sales volume of more than 11 percent. Northwest Turin and southern Palermo (Sicily's regional capital) both registered a moderate growth of some 2 percent. On the contrary, central Florence and southern Naples had a drop in sales volume of 5.2 percent and 1.3 percent, respectively. "The expansionary trend - underway since 2014 - is also confirmed for the first three months of 2019, with an 8.8 percent quarterly increase (slightly lower than 9.3 percent registered in the previous quarter)," the report added. However, experts warned the risk of a new slowdown was "not completely averted", due to some uncertainties related to the country macro-economic context, and the recent tensions with the European Union (EU) over budget policies, which alarmed financial markets. Beside that, "a reduction in the number mortgage applications is being registered (in 2019) as well as a more prudent attitude on the part of banks in giving them," Dondi explained. As such, the expert said a new slight drop in the number of transactions might still occur, "not so much throughout 2019 - when the market will remain supported by the positive performance of the first semester - but rather in 2020."

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