Rising Interest Rates and Limited Supply: Challenges in the South Tyrol Real Estate Market

Bolzano – The rise in interest rates is also reflected in the real estate market. A house or an apartment is generally considered an investment in Italy, but for many the dream of owning a home is becoming increasingly out of reach. While a large number of properties were bought in Italy in 2022, it is unlikely that such a result will be repeated this year. The same applies at the state level for South Tyrol.

“Around 800,000 properties were sold in Italy last year. This is an absolute record. The number was also very high in South Tyrol,” Carlo Perseghin, local chairman of the national broker association FIAIP, told Italian media.

In the first six months of this year, on the other hand, there was a decline in sales throughout South Tyrol and also in the provincial capital. However, this has not yet had an impact on prices.

The fact that fewer properties were bought in South Tyrol is due to the fact that there is less supply – both in terms of old and new buildings, emphasizes Perseghin. In addition, prices tended to remain high. Above all, however, Perseghin blames the higher interest burden and the increased difficulty of obtaining credit for the development.

Add to that double-digit inflation, which is eating away at people’s savings, and the higher cost of paying in installments.

Another obstacle are the high property prices – especially in certain areas in South Tyrol. “The probability of finding something under 10,000 euros per square meter for new buildings in Gröden or in Val Badia is pure utopia,” explains Perseghin. In Bolzano you have to reckon with peaks between 8,000 and 9,000 euros per square meter.

In the periphery, however, there are definitely cheaper offers. In Laives, for example, you will find new buildings with a property price of 4,000 euros per square meter. The prices are also cheaper in Auer and Neumarkt. Often you have to accept that you have to commute to Bolzano for work reasons.

In order to have an impact on apartment prices with the supply remaining low, more building land and zones specially designated for this would probably be needed. However, given the scenic conditions in South Tyrol, this is not an easy task.

From: mk