Home sales in Italy fell the most in at least eight years in the first quarter as real estate owners in the recession-hit country faced the prospect of a new property tax.
With about 110,000 transactions in the three months through March, home sales declined 20 percent from a year earlier, the Finance Ministry’s Agenzia del Territorio said in a report posted on its website today. That was the biggest drop since data collection began in 2004. Total sales fell an annual 18 percent.
The decline was “mainly driven” by the recession, the agency said in today’s report, while a new property tax that began to influence buyers in the first quarter “won’t be an incentive for the market.”
Italy expects to raise about 21 billion euros ($26.6 billion) from a new levy that was approved in December, Prime Minister Mario Monti’s office said May 18. The so-called IMU tax, whose payment is due for the first time this month, marked the return of taxation on primary residences after four years. The euro region’s third-biggest economy entered its fourth recession in a decade in the fourth quarter of 2011.
‘Even Worse Performance’
“Given the overall level of taxation and the economic conditions, I am actually surprised that there were still some 100,000 houses sold in the first quarter,” Mario Breglia, chairman of real-estate research firm Scenari Immobiliari, said in a phone interview. “Looking at the latest three months, we expect an even worse performance.”
Total real-estate sales rose in both the third and the fourth quarters of 2011 at annual rates of 1.6 percent and 0.4 percent, respectively.
Today’s report shows a “marked decrease” in sales both in small towns and the country’s eight largest cities, the agency said in the statement. “That’s an abrupt reversal from the upward trend” in the second half of 2011.
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