Sales on the rise in the second quarter of 2024, with average prices per square metre increasing in Italy and a cut in ECB interest rates. This is the backdrop for the Italian real estate market, but how is the property market performing in this latter part of the year, and what are the forecasts for 2025? To find out, idealista/news takes stock of the situation by analysing data from the main markets (Rome and Milan) and gathering medium-term analyses from industry experts. This is the real estate outlook in Italy for 2024-2025.
Sales trends and average prices
The second quarter of 2024 saw a trend reversal in the residential sector, as shown by the usual quarterly report from the Real Estate Market Observatory (OMI) of the Italian Revenue Agency, which indicates that the number of property transactions in Italy increased by 1.2% compared to the same period last year.
Specifically, according to the Italian Revenue Agency’s statistics, around 186,000 homes were sold, over 2,000 more than in the same period in 2023. The rise in sales is evident across almost all parts of Italy, although it is more pronounced in the North and Central regions. Smaller municipalities are driving growth with a variation of +1.6%, higher than that recorded in provincial capitals (+0.2%).
According to Diego Vitello, Research Manager at Gabetti Property Solutions: “After six quarters of negative variation, which characterised the period from the last quarter of 2022 to the first quarter of 2024, sales have returned to positive territory,” notes Vitello. “This is because the turbulent phase, which, as we know, caused a sharp spike in inflation and, consequently, in interest rates, has now been overcome. This second quarter of the year could be defined as ‘year zero’ for the Italian residential market, in which the two economic parameters, which had sidelined many families from purchasing a home, have taken a positive turn.”
As for the prices of pre-owned homes in Italy, the latest real estate value index from idealista shows an increase in both annual (2.1%) and quarterly (1.1%) terms for house prices as of August 2024. The average price of second-hand homes stands at €1,857 per square metre.
However, this figure should be viewed in the broader European context of the last decade. As highlighted by an analysis from Abitare Co. (based on Eurostat data), in the last ten years, among the 27 countries of the European Union, Italy is among the nations with the lowest price increases (+8.8%), placing second-to-last, ahead only of Finland (+5.5%).
According to an analysis by Abitare Co., among the major Italian metropolitan cities, only Milan has recorded a price increase significantly above the average over the past ten years, with a 49% rise. Bologna and Florence follow, with increases of 33% and 19%, respectively. Naples has seen a slight increase of 2%, while Rome has experienced a decrease of 13%, and other cities like Genoa (-33%), Turin (-5%), and Palermo (-21%) have shown negative performance.
Market trends in major cities
According to OMI statistics for the second quarter of 2024, the declines in sales recorded in Milan, Turin, and Naples have decreased compared to the previous period, when sales had fallen by 13.2%, 10%, and 4.5%, respectively. Other major metropolitan cities are seeing significant increases.
Specifically, increases are recorded in Genoa (+3.9% and 2,335 transactions), Rome (+3.4% and 9,456 transactions), and, albeit slightly, in Palermo (+0.7% and 1,726 transactions). However, there are declines in 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 transactions). Nonetheless, compared to the declines recorded in the first quarter of 2024, the data shows improvement in Milan, which had recorded -13.2%, Turin (-10%), and Naples (-4.5%).
House prices in Milan and surroundings
Milan is the most expensive city in Italy to buy a home, with an average of €4,989 per square metre, making it more cost-effective to buy a residential property in the province rather than the city. Most municipalities in the outskirts of Milan have average prices below the Milan average.
Among the major municipalities in the Milan outskirts, the most affordable for buying a home is Magenta, with an average asking price of €1,590 per square metre. This is followed by Abbiategrasso (€1,833 per square metre) and Garbagnate Milanese (€1,943 per square metre).
Focusing on the city itself, the most affordable area is Vialba-Gallaratese (€2,912 per square metre). This is followed by Baggio (€2,979 per square metre) and Comasina-Bicocca (€3,916 per square metre). In total, there are 13 areas that remain below the city average, including Certosa, Corvetto-Rogoredo, Cermenate-Missaglia, Famagosta-Barona, Greco-Turro, Lorenteggio-Bande Nere, San Siro-Trenno-Figino, Forlanini, Vigentino-Ripamonti, and Città Studi-Lambrate.
House prices in Rome and surroundings
In Rome, the average house price (€3,042 per square metre) is significantly lower than in Milan. However, the Roman context also highlights a similar scenario to that of the Lombard capital, with the lowest prices being found in the provincial areas.
Among the major municipalities in the Roman province, the one with the lowest average price for homes on the market is Velletri (€1,352 per square metre). This is followed by Ardea (€1,543 per square metre) and Tivoli (€1,587 per square metre). The average price for homes on the market is also below €2,000 per square metre in several other municipalities within the Roman province.
In the city itself, the only area where the average price is below €2,000 per square metre is Rome East-Autostrade (€1,959 per square metre). Listings are also found under €2,500 per square metre on average in areas such as 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, 13 areas are below the city average.
ECB interest rate cut: the impact on mortgages in Italy
In July, the European Central Bank decided to maintain interest rates following an initial cut of 25 basis points in June. On 12th September, as anticipated by the markets, there was an additional cut of 25 basis points, bringing the interest rates on main refinancing operations, marginal lending facilities, and deposits with the central bank to 3.65%, 3.90%, and 3.50%, respectively.
So, what is the cost of a mortgage in Italy today? According to idealista/mutui simulations, the monthly payment for a 30-year mortgage of €200,000 with a variable rate and a 0.75% spread has decreased from €1,026 in January 2024 to €985 today, resulting in a savings of €41 per month and €492 annually. Fixed-rate mortgages have also decreased, with the monthly payment dropping from an average of €843 at the start of the year for a 30-year mortgage with a 0.5% spread to the current €819, saving €24 per month and €288 annually.
Currently, according to idealista/mutui, the best available rate for a 30-year fixed-rate mortgage of €200,000, with an 80% LTV, is 3.20%, with a monthly payment of €691. For a variable-rate mortgage under the same conditions, the best market rate is 5.02%, with a monthly payment of €860.
Forecasts for the real estate market in Italy
According to Mario Breglia, president of the research centre Scenari Immobiliari, a national price increase of 3.1% is expected, but variations in major cities will be more pronounced, with Milan leading the top 10 cities with a +6.9% increase, followed by Venice with +6.5% and Rome with +6%. Other cities include Bergamo (+5.2%), Bologna (+5.1%), and Naples (+5%).
“There is significant interest in our cities, and our economy is strong,” explains Breglia. “So, the interest from investors is present and important. However, despite a strong domestic market, we have limited opportunities due to the number of institutional investors interested. For example, in terms of residential property, Italy could have a million transactions like France, but we are stuck at 700,000. This is because, while France builds 200,000 houses a year, we don't reach 50,000.”
Focusing specifically on the Milan context, according to the "Vincenzo Monti Prestige Prime Residential 2024" report, the increase in prices is not expected to dampen demand from investors and end-users in the prime segment, particularly in the face of very rigid supply. With positive but increasingly selective demand, the true driver of the market will continue to be the quality of the offer.
However, given the rarity of such stock, the first half of 2024 has seen a new rise in asking prices, averaging a 5.5% nominal increase compared to September 2023. Considering that the inflation rate this year is around +0.9% annually, the investment remains sound, also in real terms, with an average price growing by over four net percentage points.
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