The Real Estate Values for Second Homes in Italy are Growing or Declining?

The Real Estate Values for Second Homes in Italy are Growing or Declining?

Stefano's Column Nov 07, 2016 No Comments

The Real Estate Values for Second Homes in Italy are Growing or Declining?For some months, I hear the voices talking about the “recovery” of real estate market in Italy. In this article I am going to describe our reflections about the specific sector of the Italian real estate market – the market of the second homes and, therefore, everything that we are going to tell will have no connection with the other markets. Till 2008, the market of the second homes has being lived the interesting periods, when it seemed that the rise of real estate values would not have the limit. During those years, the market of buyers has been formed of Italian clients on 85/90% and of international clients on 10/15%. So, assuming the close of 100 transactions in a year, in 85/90 of them the buyers were Italians and in 10/15 – foreigners.
What is the idea of this introduction?


Every day, it happens to hear that the market of the second homes is rising again, in terms of values, because a lot of internationalclients buy their holiday residence in our beautiful country. If it is true that the international clients are interested to invest in Italy, then, it is also true that the market of the second homes are “recovering”. This is one of the biggest errors that could be done. Today, the market of the second homes in Italy substantially experiences only the presence of international clients in the role of buyers, the number of which has increased: in 2008 they performed only 10/15 % of the market. Considering that their number has increased, we can suggest that the percentage has risen to 15/20% of the market.



But if this is the object, we have to answer the question:

What happened with those 85/90 % of the Italian clients? What transformations did they have? The answer is certainly negative and we can talk, without the fear of contradiction, about an important fall of 5/10% that, in the medium period, does not seem, absolutely, to be the sign of improvement… Even more!
Considering all mentioned data, we can say that in 2008 there were 100 potential clients interested in purchase of a second home, 85 of them were Italian and 15 foreigners… today we have 10 national and 20 international clients, for a total of 30 buyers, of those 100 that were interested in purchase in 2008. Everyone, who knows a little the rules of the market, understands that any good or service depends on two factors: demand and offer, and that the values are rising with the rising of the demand, and declining with the rising of the offer.


SO, LET’S ANALYSE THE SIDE OF DEMAND, whether and how much the values of second homes in Italy have decreased since 2008, and when they will go up again:
In fact, since 2008 the market of the buyers has had a fall of about 70% in numbers (from 100 clients in 2008 to 30 in 2016), so assuming a decrease in the values directly proportional to the decrease in the number of customers, we could say that from 2008 to 2016 the real estate values would have to suffer a decrease of 70% in about eight years. This data is not realistic, but it is likely to think that in average over the last eight years, the decline of property values has been around of annual 5%; so we can say that since 2008 up to nowadays the values are reduced by an average of 40%.

 At that point, LET’S ANALYSE THE OFFER:
If in 2008 we had 200 country houses (one of the more sough-after categories of the second homes) on sale in the province of Siena (one of the preferable provinces of the foreigners), today we have about 1.000 country houses for sale in the same province (according to So, given that the real estate values decrease in inverse proportion to the offer we could say that, on the offer side, the real estate values of the country houses (and in general of second homes) in the Province of Siena, would have to fall by a dividend of 5 units, as the offer has increased by about 5 times. The sellers’ market still dreams and hopes to reach the values of 2008 and considers a decline of 30-40% as unsustainable. If the decrease of the requests and the simultaneous increase of the product had a decrease in direct proportion to the two percentages, today we can talk about a nearly 80% decrease of the values, and not about 30/40% instead that it is objectively registered.

But let’s analyse when it would be plausible to assume a real recovery of the second homes on the real estate market; if look attentively through analysis indicated above, a recovery in property values will come when there will be an increase in demand and a simultaneous decrease in offer. The same way we receive the following analysis:

When will we have the major request?

Basing on the previous analysis, we cannot predict a further increase in international demand, given that this has been already examined and that at the same time, unfavourable international situations are “rowing” against a further increase (Brexit, terrorism, serious difficulties in global economy)…So, assuming that the international demand, in the best case, can remain the same, without any significant changes, we can expect and hope for the return of Italian buyers of second homes.

But when do they usually buy a second home?

  • First, when there are financial resources in excess, then you can afford to invest in something “superfluous”. Regarding this, we are all absolutely aware that Italy and Italian families do not currently find themselves in this situation, and that to be able to turn it back, the economy of our country has to “flourish” again, that will not be probably at least in the next 4-5 years … However, nobody can know how the Italian economy will be, and that one of the World. Therefore, we can think, from this point of view, that the number of Italian buyers of second homes will not increase…
  • Another variant, people buy a second home with the intention to spend holidays at seaside at “relatively” low cost and when they chose “stable” type of holiday. In this aspect, the world has changed completely. Moreover, the second homes also have difficulties like too high operating costs, and nowadays, they are not economically advantageous considering the time of real enjoyment of this property. In fact, that is true that the operating costs now far exceed those that would have to bear the holiday period in a rented house. While a few years ago, however, they could think of a possibility of investing in real estate, with the objective to obtain short-term increase of capital; i believe that any explanations are unnecessary here.
    Finally, the holiday preferences have suddenly changed in the last 10/20 years. In fact, if previously people appreciated the holidays at the same sea – at the same beach, nowadays, they try to organise their holiday in a different place every year. The new generation consider the purchase of a holiday home as a kind of obligation and not as a potential.


All these analyses show us, with great assurance and without contradiction, that in the short-medium period, the values of  second homes will not increase by the part of Italian customers and that, at best, the number of International clientswill have a slight increase.







To increase property values it is necessary to decrease the number of those currently on sale. Our experience tells us exactly the opposite thing; in fact, many of the abovementioned reasons, for which many Italians do not buy holiday homes any more, are the same that lead many homeowners to put their second homes on sale, in particular:

  1. Lack of time to enjoy the property, both individually and with a family;
  2. The new generations see their holidays around the World and not in the countryside or near the sea, except a few days during the year;
  3. Operating costs have increased so much that, ironically, it is much less expensive to rent a more beautiful property for two or three weeks, rather than maintain their own, for the same period of holidays, you might want to rent.
  4. The latest point, but not to be underestimated, is that the government sees in the owner of one or more second homes the rich person “to control” or, even worse, “to press”.


And then, after all these considerations, we really think that in the short – medium period the values of real estate used as second homes can back to increase? The answer is absolutely not just for all the reasons listed above… and indeed it is plausible to expect a further decline of these values.





The scenario above is quite real, but fortunately there are still those who invest in property in Italy. But who really are buying second homes in Italy?

  • First of all, they are foreigners. For the latter, all those considerations, made previously, are less important, both because Italy continues to have a very important international appeal, and because the number of international customers interested in Italy continues to grow, even if the countries of their origin changes from year to year, because of all the vicissitudes that occur in the World (foreign exchange rates, economies, Brexit, more or less serious embargoes, wars etc. etc.). So, in the short-medium period, those who want to purchase a luxury property in Italy, would be well-advised to find a partner

as the Great Estate Group, with twenty years of experience of managing the foreign buyers, with the professional team of native speakers on various international sectors, or Italian professionals who are already familiar with the needs and working approach appreciated by the international clients. But the same clients are more attentive and more informed as about the real estate values, as about the property they are going to buy, so the house to be sold has to be presented as well as possible (photos, translated descriptions, videos with drone etc.etc.) and, the most important, has to have the price in line with the market. The international client is usually not used to negotiate, he used to deal with the “correct” market;
therefore, the properties with off-the-market prices are not taken even in consideration.

Finally, international customers know that in Italy there is a lot of properties for sale, and they hope and expect to make a good investment, at the first moment, at least. Put the house at a too high asking price on the market means, in 100% of cases, delay the sale on a few years, with the certainty to decrease their expectations, given that real estate values in the coming years will be destined to fall further, for all considerations made above. In order to sell a luxury home to international clients it is necessary:


  1. To make an objective valuation of the property;
  2. To establish it in the best way as possible;
  3. To entrust a serious, professional company, famous on the international level;

Shortly speaking, it is necessary to organise the sale in a professional manner; with all the aspects that Great Estate can guarantee, thanks to the results obtained in the last years.

  • On the second place we have the investments of Italian buyers, but why?

Few Italian clients buy a property, they do so to differentiate their investments. Today, the management of financial recourses has become increasingly less convenient and even dangerous. This factor, together with the values that have never been so low as in the last 20 years, has allowed a slight rapprochement of Italian buyers, and essentially for the properties located in large cities, where it is also possible to take advantage of the modern trend of Holiday Rentals, which, in fact, is transforming many homes in small hotels.

Basically, these are only two categories of customers who today and, probably, in the next few years, will buy second homes in Italy. Great Estate has managed to engage and to intercept this type of customer. However, even a well- structured organization as a Great Estate is not able to sell the property with out-of-the market price that is higher than its actual value. Very often people say that we are inclined to sell off our real estate heritage. Personally I could say that only intelligent people manage to analyse a certain historical period and objective data, by giving the precedence to the rationality rather than to delusions of grandeur and presumption which, in 100% of cases, only lead to the delay of the sale and substantially decrease its economic objective.

Chiara Peppicelli

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