Italy's Residential Property Market Rebounds with 9.5% Growth in H1 2025

Italy Sees 9.5% Growth in Residential Property Transactions in H1 2025

Italy's residential property market is showing a strong recovery with a 9.5% increase in transactions during the first half of 2025 compared to the same period in 2024. This growth is largely attributed to favorable macroeconomic conditions, including a significant interest rate cut by the European Central Bank (ECB) to 2.15% and stable inflation rates around 1.6%. The national average property price currently stands at €1,705 per square meter and is expected to rise by 1.8% by the year-end. This revival marks a significant turnaround after years of market uncertainty and indicates renewed confidence among households in property as a stable investment, reinforced by the latest data from Mercury Estate.

Regional Performance: Northwest and Northeast Italy Lead Growth

In regional terms, the northwest and northeast of Italy have led the charge in transaction growth. According to Mercury Estate, the northwest recorded a 9.2% increase, while the northeast saw an 8.5% rise. These regions have become increasingly attractive due to their combination of economic stability and quality of life, which appeals to both domestic buyers and international investors. Turin and Palermo, in particular, have demonstrated impressive double-digit growth in transactions, with Turin experiencing an 11.3% increase and Palermo 10%.

ECB Rate Cuts and Stable Inflation Drive Market Recovery

The resurgence of the Italian housing market can be attributed to recent macroeconomic policies, including the ECB's decision to lower interest rates to 2.15%. This reduction has made borrowing more affordable, encouraging both first-time homebuyers and seasoned investors to enter the market. Inflation has remained stable at 1.6%, which has helped maintain consumer purchasing power and provided a conducive environment for real estate investments. Such economic stability has bolstered investor confidence, fueling demand across various segments of the market, as highlighted by Trevi Elite.

Strong Investment in Italy's Real Estate Sector, €5.2 Billion in H1 2025

Investment activity in Italy's real estate sector has picked up significantly, with a total of €5.2 billion invested in the first half of 2025, representing a 50% increase compared to H1 2024. The hospitality sector, which recorded investments of over €1.5 billion, stood out as a particularly strong performer, experiencing an 88% increase year-on-year. Other sectors, including student housing, offices, and logistics, also saw notable investment growth. According to CRE Herald, these figures underscore the heightened confidence of investors in Italy's real estate market, driven by robust demand and positive economic indicators.

€5.2 billion invested in the first half of 2025, representing a 50% increase compared to H1 2024.

Major Cities Like Milan and Rome Drive Price Increases

Milan and Rome continue to play pivotal roles in driving up property prices, with forecasts suggesting a price increase of 6.9% for Milan and 6% for Rome by the end of 2025. The demand in these metropolitan areas is driven by their economic significance and cultural attractions. As highlighted by Trevi Elite, over 90% of transactions involve older residential properties, which is driving price growth for new developments. The demand for sustainable and specialized housing is also expected to rise, positioning these cities as key hubs for future investment opportunities.

Future Implications: Continued Growth Expected in H2 2025

Looking forward, the Italian residential property market is expected to maintain its upward trajectory in the second half of 2025. The sustained low-interest environment and stable economic conditions are likely to support continued transaction growth and price increases. According to a report by Idealista, the rental market is also experiencing an uptick, with average rents increasing by 2.3% and significant rises observed in cities like Palermo and Rome. The push towards sustainable and energy-efficient housing is expected to further drive demand, as buyers and investors seek properties that align with environmental considerations.