Economic Impact of Coronavirus (COVID-19) – Italian Property Market
Is the housing market the same in Italy now or have property prices dropped at all due to Coronavirus (COVID-19)?
If you have a property in Italy or you are planning to buy one, you may be asking yourself whether and how the Coronavirus (COVID-19) pandemic has impacted the real estate market in Italy and the prices of Italian property.
Unfortunately, many people have lost their jobs or have had to close their professional activities during the lockdown; thus you might be led to think that this is a good time to invest in real estate in Italy, because Italian property prices are decreasing as more people need cash so they are forced to sell off their assets.
Is that true?
Will Coronavirus (COVID-19) negatively impact the real estate market in Italy?
This is not an easy question to answer. Not only because in Italy real estate agencies have just recently restarted their activities but also because it is too early to make any evaluation on price fluctuations. There are cultural implications in this answer.
Generally speaking, no matter what causes a period of crisis, properties are sold at a lower price when owners need cash in the short term. That is to say: if there is no “urgent” need of cash, it is unlikely that property owners will be keen to sell off their properties for a quick sale, at a lower price to generate cash.
Will Coronavirus (COVID-19) negatively impact house prices in Italy?
In order to understand the impact of Coronavirus (COVID-19) on Italian house prices, there is an important cultural aspect to be taken into consideration for the property market in Italy. Investing in the property market and owning properties has always been seen by Italians as a secure investment and in any period of crisis this is more than ever the case.
In light of the above, it is hard to say how Coronavirus (COVID-19) will actually impact the Italian property market. It is difficult to predict whether property prices in Italy will drop or remain substantially the same.
Will Coronavirus (COVID-19) impact Italian property agreements signed before the pandemic crisis?
The scenario might be slightly different for property purchase negotiations started prior to the Coronavirus (COVID-19) emergency. In this case, if an agreement had already been reached but has been delayed due to the Coronavirus (COVID-19) emergency, it is unlikely that there will be a major impact.
In other cases, there might be room to claim for force majeure to apply due to the Coronavirus (COVID-19) emergency. It will depend on the specific case, for example with respect to the exact fulfilment of the contract, payment timing, breach of contract claims, etc.
If you need advice on the impact of the Coronavirus (COVID-19) on your contract, please get in touch.
We are closely monitoring the Coronavirus (COVID-19) impact on the Italian property market and will keep you updated.