Italy House Prices to Fall as North-South Gap Widens, Fitch Says

Italy’s home prices will keep dropping until they are 20 percent lower than their pre-crisis peak as the gap between values in the north and the south widens, Fitch Ratings said.

Residential values fell in the first quarter, extending the average decline from a 2008 high to 16.3 percent, the ratings firm said in a report Wednesday.

“Regulatory uncertainty, slow economic recovery and high unemployment curb the supply and demand for home-acquisition loans,” Fitch said in the report. “These factors are likely to continue to put pressure on the housing market.”

Italy’s economy expanded in the first quarter, paving the way for an exit from its longest recession on record. While less strict lending policies helped transactions rebound last year, prices kept falling, particularly in the Mezzogiorno, the eight southern regions including the islands of Sicily and Sardinia.

“The price disparity between southern Italy and the rest of the country increased further in the first three months of 2015,” Fitch said. Compared to the 2008 peak, prices are down by 27.7 percent in the south, while the decline in northern and central Italy grew slightly to 15.5 percent.

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