But a lack of snow and tourists in December and January has stopped the rise in its tracks, according to Andorra property companies.
'We normally seen an influx of buyers from the first week of December through to mid April who want to buy ski apartments, but it has been very slow this year,' they comment, adding 'It's been an unusual ski season as there was next to no snow between December and mid January. A lot of tourists, some of whom end up buying a property in Andorra, delayed their visit or went elsewhere.'
Andorra has unusually high demand for property as there are three streams of buyers:
An active local market, international buyers looking for residency in a tax haven that offers residents a zero rated tax rate, and second home buyers looking for a ski property in the Pyrenees.
And it is the second home buyers, mainly for ski properties, that has seen the Andorra property market stopped in its tracks - for six weeks at least.
One of the highest rises in recent years was the 19 per cent increase in property values in 2005, with the 2006 increase expected to be not far behind at around 15 per cent.
Andorra Property
As well as being a top ski destination, Andorra is also a tax haven, with many people moving to the country to benefit from her income tax free status.
Buying a property in Andorra is often seen as a route to residency, which entitles people to live in Andorra and benefit from her tax haven status.
To obtain residency in Andorra, applications need to be submitted in Catalan. A notarised copy of the applicants passport, birth certificate and a certificate of good conduct from the home country are submitted at the same time. According to a local travel guide residency normally takes between three and six months to be approved.
Once residency is granted, residents are supposed to spend six months a year in Andorra, but this isn't policed.
One of the drawbacks for those looking to become a resident in a tax haven when considering Andorra has been that the country has no airport of its own, and is unlikely to have ine future given that it is located in the Pyrenees. The nearest airports are Barcelona and Toulouse.
Recent improvements in the road from Barcelona to Andorra though have cut the travelling time by some thirty minutes to two hours fifteen minutes.
'Given the tax advantages Andorra has', note the Andorra guide, 'A two and a quarter hour trip to the nearest international airport could be viewed as a small price to pay for those who will be saving substantial amounts of money in tax. Especially when you consider that their properties could be rising in value quite significantly in the years to come.'
This is caused, says the report, by a bigger property offer on the market, a more careful demand and a longer sale time.
The Italian property market, in fact, has slowed down also because the potential buyers have lengthen their decision time, pushed by the news about the Italian economy and by the unsureness of their budget availability. Furthermore, the tightening of credit distribution rules adopted by the Italian banks, despite they haven't been hit as much hard as in all the other countries by the credit crunch, has created great difficulties for those buyers who don't have a big cash availability and need a bigger mortgage. This lack of cash flow has caused tougher negotiations between buyers and vendors, leading the deals to be closed at a lower sale price.
The property prices have seen a stronger decrease in all the regional capitals (-3.9%) followed by the biggest city's outskirts (-3.8%) and eventually in the biggest cities (-3.6%). Within the biggest cities the major decrease has been registered by Palermo (-4.9%), Bologna (-4.6%) and Naples (-4.4%). Rome has registered a decrease of 3.6% and Milan of 2.4%.
As for the biggest city's outskirts the major price decrease has been registered by the outskirt of Bologna (-5.4%), followed by Rome's outskirt (-4.6%) and the outskirt of Naples (-4.4%).
To sum up the data, the major price decrease has been registered in the main cities of the South (-4%), followed by the ones in the North (-3.9%) and then in Central Italy (-3.7%)
But the second half of 2008 has recorded also a coming back of the investments in property. Ever more investors are running away from unsure financial investments and are heading towards property investments, confirming the property market as one of the most secure investments and it as the favorite by Italians.
The expert's feeling is that in the first months of 2009 there has been an increase in the property demand, pushed not only by lower interest rates but also by the awareness that the property market has undertaken a new direction and that the property price decrease offers great investment opportunities.
In the second half of 2008 the main key used to turn all the negotiations into sales was, once again, the price. Nearly the totality of the potential buyers pay ever more attention to the property quality and is ever more focused to get a good value for money. This has determined a stronger decrease of prices in resale properties than in restored and new properties. Medium and lower end properties have registered the strongest price decrease, whereas prestigious properties have better hold their prices, although also for this range of property the buyers are more careful, especially if the property doesn't sutisfy all the buyer's needs. This means that the caution before buying has hit all the property ranges.
The second half of 2008 has seen the upswing of the property demand that in the previous semesters had decreased. The post summer negative trend of financial markets has set a return of interest in property investments that is enduring also in the first months of 2009. The investors have diverted their capitals towards properties that could provide an income, such as properties to be rented as holiday homes.
The analysis of the demand in January 09 show that in the Italian biggest cities the more requested property type was a two bedroom property (house or apartment) chosen for the 35.7% of the times, followed by one bedroom property (28,6%) and three bedroom property. The average price ranges of the property request is between ?170,000 and ?249,000 (24%) followed by the price range between ?250,000 and ?349,000 (21,6%). The main property type offered by the market is the two bedroom property (33.9%), followed by one bedroom property and three bedroom property (22.8%).
It is difficult to see what will happen during the next months, much will depend on the trend of the Italian economy and on the bank's behavior. The experts predict that for the upcoming months we will see a further decrease in the sale's volume and in the property prices. Especially the decrease in property prices along with cuts in the interest rates have given confidence in the potential buyers who start to see that the period offers good opportunities to buy a property in Italy.
Both Roger Munns & Simone Rossi are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
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