Italy's tourist resorts hit hard by property slump

Property in holiday destinations like Capri are losing value faster than urban housing

PUBLISHED : Wednesday, 10 October, 2012, 12:00am
UPDATED : Wednesday, 10 October, 2012, 2:21am

House prices in recession-hit Italy's tourist resorts, such as Capri, fell more than in the biggest cities this year due to investors' concerns about the economy and higher property taxes, a research institute said.

Prices of residential properties in 31 resorts across the country fell an average of 4.4 per cent in the 12 months to the end of September, the Bologna-based institute Nomisma found.

That compares with a 3.4 per cent decline in Italy's 13 biggest cities.

"The severe fall in Italian and foreign demand prompted sellers to review their asking prices," the report said.

Prime Minister Mario Monti introduced a new property tax last year, and expectations of more levies on real estate "pushed some owners to shorten the timing of their de-investments" prompting "a downward trend" unlikely to end in the short term, Nomisma predicted.

The euro region's third-biggest economy will shrink 2.4 per cent this year, as rising joblessness and Monti's austerity drive weigh on demand, employers' association Confindustria said.

The government matched that projection in its growth forecasts released on September 20, as Europe's second most-indebted economy grapples with the sovereign-debt crisis.

Some of the resorts hardest hit were the island of Capri, the ski destination of Cortina D'Ampezzo and the village of Positano on the Amalfi coast, where prices fell 5.7 per cent, 6.4 per cent and 7 per cent respectively, the report said.

Home sales in the second quarter posted the biggest drop since data collection began in 2004, according to the Finance Ministry's Agenzia del Territorio. A property levy, marking the return of taxation on first homes after four years, "won't be an incentive for the market" in coming months, the agency had said in a report published in June.

Prices may keep falling in coming months amid a "widespread perception that the investment in real estates is the primary target of any budget adjustments," Nomisma said.