Like in other European countries - the dynamic forces of the economy are also weak in Italy. The growth of the gross domestic product will, according to many official forecasts, continue to be just in the 1% to 1.5% area for the next 1 1/2 years. Not exactly an exiting outlook. Not exactly an outlook that promises major impulses for financial investment and real estate markets.
The other side of the coin, however, is the low inflation - with consequences also on the interest rates. These are on a level that one has not seen in Italy in the past!
The interest rate level is thus one of the few forces that keep the property market lively! The low interest rates may also give the Italian banking sector some space to recover. At least, as it becomes visible on statistics of the Banca D'Italia, the reduction of lending to the private households has been stopped; bank lending is again in the positive area since the beginning of the year.
Thus, we expect that the recovery of the real estate market, as depicted in the graph on prices and turnover, will at least slowly continue.
Rolf T. Boeni
