For the Italian and the international real estate market the year 2022 ended with some shocks due to uncertain conditions related to inflation and the war in Ukraine. But what to expect for this 2023 that has just begun for Italy property market?
Let’s see together.
Energy prices will be cheaper
What’s the situation like in Italy in terms of energy prices?
In early 2023 gas prices dropped after its surge experienced in 2022 since the outbreak of war in Ukraine. They went from 65 euros/mwh on average in January to 114 euros/mwh in December (14 euros/mwh in 2019). The drop was favoured by European gas stocks which are still high, as well as mild weather and thus lower gas consumption.
A few days ago Giancarlo Giorgetti, Italy’s new economy minister, announced a possible drop by about 40% in gas bills starting this February.
The average price of petrol is about 1.81 euro ($1.96) per litre and 1.86 euros per litre for diesel, up from 1.63 euros and 1.68 euros respectively at the end of 2022.
Prices rose after the government cancelled a cut in excise duties first introduced by Meloni’s predecessor Mario Draghi in the first half of 2022, when the price of petrol exceeded 2 euros per litre.
Property prices in Italy and mortgage rates in 2023
The golden age of mortgage rates that were below one percent now seems to be over. The new year seems to continue an upward trend that started in mid-2022.
The reason that has led the ECB to take action on several occasions with rate hikes (the latest in December that brought the cost of money to 2.50 percent, but a further one up to 3 percent is expected) is high inflation, now at 8 percent but spiking last October to 11.6 percent.
Those paying the heaviest consequences will be variable-rate mortgages, with a gradual rise in the Euribor rate to 4 percent, so soon an adjustable-rate mortgage could cost as much as a fixed-rate one. This latter therefore is the one that home buyers should evaluate now.
The fixed rate allows you to plan precisely for monthly spending without running the risk of further rises in the cost of money and, in the event of a reduction, to take out a subrogation.
In any case, interest rates are at levels that are still attractive when compared to the peaks reached in years past.
This will certainly lead to a slight decrease in sales, with prices, however, stable for real estate.
Tax bonuses in Italy
Italy is still one of the best places to live and invest especially if you are in your retirement years.
As a matter of fact you could still benefit from an alternative tax regime introduced in 2019 that caps taxation on pensions and other foreign income at 7% if you move your residency to Southern Italy.
