Talking Property: The price of houses and apartments in Rome has been rising steadily over the past three years. But Irish buyers may find something there to tempt them. Paddy Agnew reports
The Irish are fond of complaining (boasting, really) about the boom in real estate prices over the last decade. To some extent, though, Ireland has merely been doing a lot of catching-up, price-wise.
For example, when we first moved to Italy in 1985, we ended up living in a very small 80 sq m (861 sq ft) one-bedroom, small kitchen, ground floor flat in Montesacro, a Rome residential suburb.
We were astonished when friends and a nearby real estate agent estimated the flat to have a 1986 market value of IR£80,000.
That price struck us as outlandish, given that only months before leaving Dublin, we had looked at a splendid, three-bedroom period house, with large garden front and back, in Sandymount which had been priced at £38,000. I well recall, too, the Dublin real estate agent saying that he thought the property was "probably over-priced".
Clearly, the Rome real estate market has known nothing like the Celtic Tiger-driven boom of the last Irish decade. The Montesacro flat that would have cost approximately €100,000 in 1986 would probably fetch €240,000 today. As for the Sandymount property, suffice to say its value would have increased by considerably more (10 times, 15 times?) in the intervening period.
Even if the Italian market has known nothing like the Irish boom in recent years, it is still true to say that property or investment in the "mattone" (brick) has long been a constant feature of Italian macro and micro-economics. For example, property retained its value even through the trauma of Second World War, while the postwar years registered a constantly upward graph until 1992.
Although prices were by and large frozen for much of the 1990s, a number of factors have combined to see the market flourish again in recent years. According to nationwide real estate vendors Gabetti, an 80sqm (861 sq ft), reasonably central, big city apartment close to public transport and good shopping facilities has gained 15 per cent in value over the three years from 2000 to 2003.
Gabetti points out that, allowing for running costs, property rates, taxation and inflation, this represents a 4.5 per cent annual return on your money. In today's Italy, the average Italian family simply does not have many investment options that can guarantee a 4.5 per cent return.
This is, after all, a country where the second favourite national sport after football used to be investment in government bonds. Yet, where once the state bonds guaranteed an annual 10 per cent return, now they barely generate 1 per cent.
Poor returns from state bonds, ever lower interest rates thanks to the European Central Bank's cuts over the last two years and a post-September 11th uncertainty about investment in the stock market have all helped further consolidate an already well-established Italian property market.
Before rushing headlong into that market, however, the would-be buyer would do well to understand some of its peculiarities. For a start, mortgages are a relatively new phenomenon since, until recently, Italians nearly always bought properties outright. This can mean that mortgage rates are not as attractive as in Ireland (5.5-6 per cent is a standard Italian rate).
Even now, there is no such thing as "alarm" about young couples, first-time buyers. Most often, they are provided for by Mama and Papa who have been saving to buy them their first home (apartment) almost since the day they were born.
Then, too, there is the "liquidazione" phenomenon. This is a sum of money equivalent to a month's salary which your employer is obliged to set aside for you on a yearly basis and which can be "cashed" on retirement or earlier.
Many Italians use their liquidazione to buy a second, or third, or fourth house in a country where it is a norm for even modestly well-off families to have "weekend" houses, in the country, in the mountains, by the sea or in all three places.
The would-be buyer in the Italian market would also do well to familiarise himself with a lot of jargon. The word "casa" (house) covers a wide variety of habitations, including apartamento (large flat), monolocale (studio apartment), bilocale (two roomed apartment), villa (detached house with surrounding area), villino (small house with garden), casetta (small house) and casale (farmhouse), to name only the most obvious.
Then, too, the buyer must face charges that include purchase tax (2 per cent of purchase price, 4 per cent if non-resident in Italy), notary fees (3-5 per cent), agency fees (4-5 per cent) and stamp duty (0.6 per cent).
Having bought the house, do not forget to pay your ICI (local rates), IIC (Government Survey Office Tax), INVIM (property increment tax), Imposto di Registro (Registration Tax) and TCR (rubbish collection tax) bills.
Still interested? Well, then, try these for current prices, all in northern Rome "prime" residential areas, prices courtesy of estate agent Tecnocasa:
An 80 sq m (861 sq ft) attic flat, two bedrooms, one bathroom, three terraces, car-park place - €320,000; A 90 sq m (968 sq ft) flat, one bedroom, terrace - €232,000
A 60 sq m (645 sq ft), ground floor flat, one bedroom, small courtyard - €210,000
Entire third floor in apartment condominium, three bedrooms, nanny bedroom, three bathrooms, large balconies, garage - €2.6 million.
Happy househunting.
