Italy’s residential property market is showing clear signs of recovery. This is the finding of the latest Residential Quarterly Outlook – H1 2025 published by Patrigest, the research and valuation company within the Gabetti Group. The figures speak for themselves: in the first six months of the year, transactions increased by 11.2% compared with the first half of 2024, with over 172,000 sales completed. Prices have also seen an average increase of 2.5% across Italy’s ten largest cities, confirming renewed dynamism within the housing sector. Let's take a closer look at Italy's property market outlook for the rest of the year.
Real estate continues to be a safe haven in Italy
“In an era marked by geopolitical instability, economic volatility and income uncertainty,” explains Luca Dondi Dall’Orologio, CEO of Patrigest, “property continues to represent a safe haven, a symbol of security, wellbeing and long-term investment. 2025 has opened with a more favourable macroeconomic climate: inflation is stabilising, GDP growth is estimated at 0.4%, and interest rates are falling, stimulating demand.”
Transactions: Genoa and Turin lead the way
Data from the first quarter of 2025 shows a significant increase in transactions, with particularly strong performances in Genoa (+13.5%) and Turin (+12.2%). Rome and Milan continue to act as market drivers: the capital recorded 8,525 transactions (+10.7%), while Milan closed the quarter with 5,505 sales (+7.1%).
The analysis confirms that the market is primarily being driven by purchases for direct use (main residences), with investment-driven purchases remaining limited. Purchase intentions remain stable, at between 2% and 4% of Italian households, but confidence appears to be recovering following the slowdown seen in 2023.
In terms of prices, Naples tops the table with an increase of 3.2%, followed by Genoa, Palermo and Rome (each +3%), Florence (+2.8%), Turin (+2.5%) and Milan (+2.4%). Bologna (+1.5%), Bari (+1.8%) and Padua (+1.9%) close the list. The market is stabilising around more realistic values, with a clear premium for well-located homes that are energy-efficient and aligned with post-pandemic housing needs.
Mortgages and rates: more favourable conditions
The reduction in interest rates is playing a key role in the recovery. The one-month Euribor has fallen to 1.98% (from 3.69% in June 2024), and the 10-year Eurirs stands at 2.52%, encouraging both fixed-rate and variable-rate mortgages. Bank lending rates for home purchases have fallen from 3.6% to 3.2% over the past year. The spread between Italian BTPs and German Bunds has also dropped below 100 basis points, a positive sign of Italy’s perceived stability in international markets.
Rentals: demand rising but supply falling short
Alongside the recovery in property sales, the rental market continues to grow, although structural issues persist due to limited supply. In the first quarter of 2025, 257,250 new rental contracts were registered, up by 1% compared with the same period in 2024. Demand is increasing, particularly among young people, single tenants and couples – including those with young children – who prefer renting for financial reasons or greater flexibility.
Long-term contracts remain the most widely used (42%), followed by temporary contracts (27%), agreed contracts (26%) and student rentals (5%). Major cities remain the main hubs for demand: Milan and Rome each exceeded 90,000 new contracts in 2024, followed by Turin (47,000), with Bologna, Florence and Naples each seeing over 20,000. In terms of percentage growth, Padua (+12.8%) and Bari (+7.6%) stand out.
Average rents have also increased by 2.3%, with the highest rises in Palermo (+4.5%), Rome (+3.9%), Florence (+3.5%) and Turin (+2.4%). Milan and Bologna recorded more moderate increases (+0.9% and +0.8% respectively), while Genoa saw a slight rise (+0.4%).
Green homes and new housing preferences
Energy efficiency is becoming a decisive factor in property choices. Around 33% of property searches now focus on homes in energy classes A-B, although most buyers are looking for properties in classes C to E, seen as a good compromise between performance and affordability. The implementation of the European “Green Homes” Directive in 2024 has highlighted the increased appeal of energy-efficient properties, which are selling faster than homes requiring renovation.
Three-bedroom flats remain the most sought-after property type, while two-bedroom and studio flats are gaining popularity in areas with high property demand. In terms of buyer profiles, couples with children (78%) and young couples seeking stability (64%) are the most active in the market. Purchasing a main residence is the primary reason for 64% of buyers, while 36% are seeking a second home or an investment opportunity. Furthermore, nearly 58% of buyers intend to use a mortgage, reflecting growing confidence in the credit system.
Outlook for the second half of the year
According to Patrigest, the second half of 2025 is expected to continue along the trajectory set in the first six months. “We anticipate a further increase in prices in the main Italian cities,” concludes Dondi, “with year-end forecasts suggesting a rise of 1.8% compared with 2024. Demand remains strong, particularly for sustainable, well-located properties that meet new lifestyle needs.”