With average prices per square meter rising in Italy and ECB interest rates lowered, sales were on the increase in the second quarter of 2024. This is the background for the Italian real estate industry; however, how is the market doing in this later half of the year, and what are projections for 2025? Esales investigates by means of data analysis from the key marketplaces and compiling medium-term industry evaluations from specialists. This is Italy’s real estate scene for 2024–2025.
Average pricing and sales trends
The usual quarterly report from the Real Estate Market Observatory (OMI) of the Italian Revenue Agency shows that the number of property transactions in Italy grew by 1.2% compared to the same period last year, so reversing the trend in the residential sector in the second quarter of 2024.
Specifically, almost 2,000 higher than in the same time in 2023, the Italian Revenue Agency’s records show that around 186,000 houses were sold. Though it is more noticeable in the North and Central areas, the increase in sales is clear practically all throughout Italy. Smaller towns are driving increase with a variance of +1.6%, more than what provincial capitals (+0.2%) record.
Diego Vitello, Research Manager at Gabetti Property Solutions, adds that sales have returned to positive territory following six quarters of negative variance, which defined the period between the final quarter of 2022 and the first quarter of 2024. “This is because the tumultuous period has now been overcome; it is what, as we know, produced a significant rise in inflation and, thus, in interest rates. For the Italian residential market, this second quarter of the year may be regarded as “year zero,” in which the two economic parameters—which had blocked many families from buying a house—have started to show positive results.
Regarding pre-owned house prices in Italy, the most recent real estate value index reveals annual (2.1%) and quarterly (1.1%) terms for house prices as of August 2024 growth. Second-hand residences sell for €1,857 per square meter on average.
Still, this number should be seen in light of recent decade European background. Italy is among the 27 countries of the European Union with the lowest price rises (+8.8%), second-to-last, ahead only of Finland (+5.5%), as highlighted by an analysis based on Eurostat data in the last 10 years.
An research by Abitare Co. shows that only Milan, among the main Italian metropolitan centres, has seen a price growth notably above the norm over the previous 10 years—a 49% surge. Following with rises of 33% and 19%, respectively, Bologna and Florence follow While Rome has witnessed a decline of 13%, Naples has had a modest growth of 2%; other cities such Genoa (-33%), Turin (-5%), and Palermo (-21%), have showed negative results.
Main city market trends
OMI data for the second quarter of 2024 show that sales decreases in Milan, Turin, and Naples have dropped relative to the last period, when sales had dropped by 13.2%, 10%, and 4.5%, respectively. Other big cities are showing notable rise.
Increases specifically are seen in Genoa (+3.9% and 2,335 transactions), Rome (+3.4% and 9,456 transactions), and, however less, in Palermo (+0.7% and 1,726 transactions). Florence (-8.1% and 1,225 transactions), Milan (-7.3% and 6,087 transactions), Bologna (-2.5% and 1,504 transactions), Turin (-2.0% and 3,886 transactions), and Naples (-0.9% and 2,154 respectively are declining. Still, the data indicates Milan, which had experienced -13.2%, Turin (-10%), and Naples (-4.5%), improving when compared to the reductions noted in the first quarter of 2024.
Milan’s and surrounds’ house rates
With an average of €4,989 per square meter, Milan is the most costly city in Italy to purchase a house; however, buying a residential property in the province is more affordable than in the city. Average costs in most suburbs of Milan are below the Milan average.
With an average asking price of €1,590 per square meter, Magenta is the most reasonably priced large town on the Milan suburbs for house purchase. Garbagnate Milanese (£1,943 per square meter) and Abbiategrasso (£1,833 per square metre) come next.
Turning now towards the city proper, Vialba-Gallaratese (€2,912 per square metre) is the most reasonably priced place. Baggio (€2,979 per square meter) and Comasina-Bicocca (€3,416 per square metre) come next. Thirteen localities in all— Certosa, Corvetto- Rogoredo, Cermenate-Missaglia, Famagosta-Barona, Greco-Turro, Lorenteggio-Bande Nere, San Siro-Trenno-Figino, Forlanini, Vigentino-Ripamonti, and Città Studi-Lambrate—remain below the city average.
Rome’s and surrounds’ house rates
The average housing price in Rome (€3,042 per square metre) is far cheaper than in Milan. But the Roman setting also emphasises a similar situation to that of the Lombard city, with the lowest costs found in the provincial districts.
Velletri (€1,352 per square meter) has the lowest average price for properties on the market among the main Roman province municipalities. Ardea (€1,543 per square meter) and Tivoli (€1,5487 per square metre) come next. Several other Roman provinces have typical house prices on the market similarly below €2,000 per square meter.
Rome East-Autostrade (€1,959 per square metre) is the sole location in the city itself where the average price is under €2,000 per square meter. Under €2,500 per square meter on average, listings also abound in places such Labaro-Prima Porta, Giustiniana-La Storta-Olgiata, Casal Palocco-Infernetto, Malagrotta-Casal Lumbroso-Ponte Galeria, Casalotti-Selva Nera-Valle Santa, and Lido di Ostia. More generally, thirteen regions fall below the city average.
Cut in ECB interest rates: effects on Italian mortgages
Following a 25 basis point first drop in June, the European Central Bank opted in July to keep interest rates the same As expected by the markets, on September 12 there was a further 25 basis point decrease to bring the interest rates on primary refinancing operations, marginal loan facilities, and central bank deposits down to 3.65%, 3.90%, and 3.50%, respectively.
What then is a mortgage’s cost in Italy today? Esales simulations show that the monthly payment for a 30-year mortgage of €200,000 with a variable rate and a 0.75% spread has dropped from €1,026 in January 2024 to €985 now, therefore saving €41 per month and €492 yearly. With the monthly payment from an average of €843 at the beginning of the year for a 30-year mortgage with a 0.5% spread to the current €819, fixed-rate mortgages have also dropped; savings €24 a month and €288 annually.
With an 80% LTV, our agents claim that 3.20% is the best rate now accessible for a 30-year fixed-rate mortgage of €200,000, with a monthly payment of €691. Under the same terms, the best market rate for a variable-rate mortgage is 5.02%; monthly payment is €860.
Forecasts for Italian real estate market
Mario Breglia, head of the research institute Scenari Immobiliari, predicts a 3.1% national price increase, but variances in big cities will be more noticeable; Milan leads the top 10 cities with a +6.9%, followed by Venice with +6.5% and Rome with +6%. Other cities comprise Bologna (+5.1%), Bergamo (+5.2%), and Naples (+5%).
“Our economy is strong and our cities are much sought for,” says Breglia. Thus, investor interest is real and significant. Nevertheless, the amount of institutional investors interested limits our possibilities even with a strong home market. Regarding residential property, Italy might have a million transactions like France, for instance, but we find ourselves limited at 700,000. This is so despite France building 200,000 homes annually—we do not reach 50,000.
Focussing especially on the Milan environment, the “Vincenzo Monti Prestige Prime Residential 2024” study indicates that, with highly strict supply, the rise in prices is not projected to reduce demand from investors and end users in the premier sector. The quality of the offer will remain the actual driver of the market notwithstanding positive but progressively selective demand.
But given the scarcity of such stock, the first half of 2024 has witnessed a further jump in asking prices, averaging a 5.5% nominal increase over September 2023. Given the inflation rate this year—roughly +0.9% annually—the investment stays solid, also in real terms, given an average price rising by over four net percentage points.
