Italy's housing woes to persist despite rise in mortgages
Italian house prices will continue to decline over the next two years as a rise in mortgage lending is not sufficient to counter a sagging economy, Fitch Ratings said.
"Any recovery in the Italian housing market will be slow and faces material risks," Fitch said in a report. "The main driver of the current housing market is the slowness of the economic recovery."
Residential lending in Italy climbed 6.5 per cent in the first quarter from a year earlier, according to data compiled by the European Mortgage Federation. The number of home purchases in the period grew 4.1 per cent, Fitch said.
Italian house prices have fallen 11.5 per cent in the first quarter from a peak in the third quarter of 2011, according to statistics agency Istat. Prime Minister Matteo Renzi has promised to accelerate his economic agenda after data last month showed the country slipped into its third recession since 2008.
The International Monetary Fund said it expected a 0.1 per cent drop in Italy's domestic product in 2014, with debt peaking at 136 per cent of gross domestic product before starting to decline. While unemployment was forecast to peak this year, the subsequent decline would be modest, Fitch said.
"Greater mortgage availability should support transaction volumes and improve affordability, especially while interest rates remain low," the ratings agency said. "Nevertheless, we still think any recovery in the Italian housing market will be slow and faces material risks."