Find a home in Italy for only 90% of your income

Image copyright Getty Images Image caption Florence and Rome are the cheapest cities to buy in Italy, say UBS analysts

Germany’s UBS Research has released a guide of which of Italy’s 12 main cities could be an affordable way to own a home.

Spending 90% of a city’s net income on housing should be enough to live comfortably, the bank says.

The guide used figures from the European Quality of Life Indicator .

UBS also offers advice on how to spot a good deal on Italian property.

How to find the right investment house

The authors note that potential owners should:

First check affordability by looking at major costs such as land tax, utility charges and mortgage interest costs, such as the maximum amount a borrower can pay towards a mortgage.

Check the size of an individual’s stake.

Ask about any possible penalties for selling without a mortgage – or any length of time when a property cannot be resold.

In Italy you can pay for a home with no downpayment but, as in most European countries, you do need to put money down at any time.

In the case of Italy, if you do buy a property without a mortgage you may only be able to get it on the same terms and conditions that others on the same budget have had.

UBS now considers the additional equity you might need to put in if you had a mortgage as “important risk premium”.

How to buy a house in Italy using historical statistics

For the sake of factoring in current inflation, UBS has listed the inflation rates of the twelve cities in Italy. For instance, in the case of Florence, UBS use the Italian inflation rate (2.8%) and the Bank of England’s inflation rate of 2.8%.

Importantly, UBS keeps their calculations transparent with great detail so that homebuyers can compare cost with each other.

Unlike some others who buy Italian property through a local network of private agents, UBS base their purchase on historical patterns of demand and supply.

For example, as tourist areas and highly-valued areas in the middle of the country tend to experience high rates of housing demand and prices, UBS focused on cities where there are many tourists.

From this, it came up with the lowest cost in each city and suggested the best place to buy.

The focus is on ownership over investment, and many properties are rented out as is the case in many European countries.

The following table contains the estimated costs and savings on the purchase of a property over 30 years at 30% mortgage on 6 December 2020. The figures are for the benchmark 3.99% for a 30-year mortgage.

Image copyright Getty Images Image caption Inside Florence’s Palazzo Vecchio

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