Following last week's elections in Italy, the country's government should soon be implementing some reforms, which could spell good news for Italy's housing market. Newly re-elected Prime Minister Silvio Berlusconi has pledged to see his electoral campaign promises through.

During the run-up to the Italian elections, Berlusconi pledged to eliminate the main Italian property tax. At the first meeting of his newly formed government, the Italian PM said that this is a promise he would fulfill, despite the estimated cost to the government. Abolishing the principal property tax in Italy (the ICI) would undoubtedly be a boon for any investor in the Italian property market, but it is reckoned that by doing so, the government would see a loss of roughly € 2 billion in potential revenue.

The abolition of the ICI would add to Italy's potential for those thinking of investing there, as capital gains tax (CGT) on property is wiped out after five years of ownership. By getting rid of the ICI, home buyers would be presented with another incentive to sink their money into Italy and this in turn could help to push up property prices in the country. Combined with the lack of CGT, this could mean long term investors would see favourable returns upon sale,

Berlusconi was eager to please during the electoral campaign and sceptics fear that he may have been too enthusiastic, estimating that if he were to act upon all his pre-election promises, he would need to find €63 billion of government cash to fund them,

It would seem that canny investors have already started to cotton on to the benefits of Italian property; earlier this year a survey carried out by A Place in the Sun Magazine ranked the country fifth in the top ten destinations for overseas buyers. The poll showed how Italy was muscling in on the traditional destinations such as Spain and France (ranked first and second respectively), moving up three positions from the previous survey.