Italy housing market shows divergent trends amid rising costs

The Italian real estate market is experiencing divergent trends. While Eurostat reports a 4.7% increase in EU housing prices and a 3% rise in rents, Italy's residential market saw a 1.1% quarterly decline in prices according to Idealista, though annual figures remain positive.

Housing affordability remains a critical issue. Istat data indicates that approximately 5% of the Italian population faces housing cost overburden, spending more than 40% of their net income on accommodation. This pressure is most acute in major cities like Milan, Rome, and Bologna, driven by stagnant wages and limited rental supply.

In response, the Italian government is considering measures for its upcoming economic plan to support younger buyers. Proposed interventions include potential tax benefits and a 5% flat-rate tax (cedolare secca) for long-term rentals.

Financing conditions are also tightening as interest rates rise. Fixed-rate mortgages have reached an average of 3.53%, while variable rates stand at 2.84%, influenced by European Central Bank decisions. Regional data shows significant variation: while Milan remains the most expensive city, areas like Udine and Trieste have seen notable price growth.