Ever more houses up for sale at judicial auctions in Italy

The number of houses being sold at auction in Italy is growing. According to the latest biannual report from Sogeea, the number of auctioned homes in Italy (case all’asta) is 21.5% higher in the last six months. These houses have normally been repossessed from people who unfortunately can’t afford to pay for the property, and the properties are then sold on to the highest bidder. The director of Sogeea, Sandro Simoncini, helps idealista/news to explain more about this growing trend in the Italian real estate sector.

Real estate auctions in different parts of Italy

According to the six-monthly report by the Sogeea Study Centre on real estate auctions in Italy, the number of repossessed homes currently up for forced sale (aka execution sale) was 21,737, compared with 17,899 last January. This is the second consecutive increase after a two-year period of constant decline.

This figure is characterised by marked differences in local Italian areas: the situation has clearly worsened in Central Italy, with the number of houses being auctioned rising from 3,441 to 5,482 (an increase of 59.4%), and in the South, where open procedures are currently 4,527 compared with 3,399 six months ago (+33.2%). The surge in the major islands was more contained (+15%), with 2,537 homes for sale compared to 2,207 in January. The North of the country is substantially stable: there are 9,191 houses up for auction, the highest figure in absolute terms but more or less in line with the records for the beginning of the year (there were 8,852).

At a regional level, just under a fifth of the total number of houses for sale at auction are in Lombardy (4,028), the region with the biggest number of properties for sale, with a large margin compared to Lazio (2,463), Sicily (2,026), Tuscany (1,872) and Veneto (1,728). The places less affected by this phenomenon of homes being auctioned off are Friuli-Venezia Giulia (85 properties sold at auction), Valle d'Aosta (56) and Umbria (37). In terms of provinces, however, the 1,053 homes for sale in Catania stand out, a number exceeded only by Rome (1,468). Then come Bergamo (880), Pavia (654), Ancona (627), Brescia (620), Turin (535), Pistoia (530) and Taranto (492).

Why are there more houses sold at auction?

"A house that ends up at auction is the consequence of a financial commitment that has not been honoured,” explains Sandro Simoncini, director of the Sogeea Study Centre. “These are difficulties that date back several years before, usually at least five. The increase in the number of properties for forced sale tells us first of all that the long wave of suffering due to banks in Italy is not over yet. It is true that many credit institutions tend to be less aggressive and more inclined to renegotiate agreements with their customers, but in any case many [seized] properties continue to arrive on the market."

Should we be worried about the rise in real estate auctions?

"It is true that we are still far from the peak in January 2017 of over 30,000 homes for forced sale,” answers Simoncini, “but two semesters of increase are a trend not to be underestimated. The numbers should not be directly correlated with the current macroeconomic dynamics, but it is a fact that the number of people who are in financial difficulty and who are experiencing the drama of seeing their homes end up in the hands of others has risen sharply. There are many homes on the market in the face of a widening of potential buyers and a speeding up of sales procedures, in particular thanks to an increasing use of digitisation, suggesting that the turnover of real estate available is continuous and that, as a result, there are large slices of the country now weakened by a crisis of more than ten years. As can be seen from the geographical data, the situation is particularly severe in many of the historically most fragile territories from a socio-economic point of view."

"The suspension of the previously launched preferential taxation,” Simoncini hypothesises, “may have blocked some subjects willing to buy. In general, however, the world of real estate auctions is going through a phase of evolution and expansion, as it is approached by a growing number of people: it is no longer a niche sector as it was until recently.”

What impact does the real estate auction industry have on the real estate market in Italy?

"Auction sales are still limited in the real estate market compared to normal sales, but digitisation is quickly changing things. Thanks to the specialised web portals and IT tools, practically all the phases [of the repossession process] can be managed remotely: from the choice of the property and consultation of the documentation to making an offer. Innovating, simplifying and making the world of auctions more transparent means automatically widening the audience of potential buyers."

Prices of homes for sale at auction in Italy

The price bands for these properties on the market has remained stable. The majority of the houses at auction have a very low initial sale price: 66.3% of them don’t exceed 100,000 euros, a share that even rises to 88.6% if you consider those included in the range between 100,000 and 200,000 euros. Considering that the vast majority of the houses belong to people who weren’t able to cope with a financial commitment, usually of a mortgage for the purchase of a first home, it is confirmed that the years of economic crisis in Italy have hit middle-low income groups particularly hard.

Can these cheap homes for sale in Italy have a positive impact for buyers?

"The market offers good investment opportunities, perhaps for a young couple with limited financial resources,” according to Simoncini. “Many banking institutions provide ad hoc tools to proceed with the purchase and the mechanisms for auctioning are transparent and all in all simple: those who have money can get good deals and there is always the possibility of getting help from a professional in the field to have the security of not taking false steps.”

How are the mechanisms of judicial auctions managed and how can they be improved?

"As in all sectors, it must meet the laws of supply and demand,” reflects the Engineer. “There will always be very attractive properties and others that are more difficult to sell: with regard to the former, it is easy for the auction price to be well above the starting base, but for the latter, however, there is obviously the risk of a series of discounts or maybe that it remains unsold altogether. The computerisation of the procedures makes it easier for the potential buyer to understand what kind of house they are up against and then deliberate accordingly. Having access to as much information as possible lowers the risk factors and, if necessary, you can always rely on a professional to be even more reassured.”