The Italian real estate market trend in 2025 shows signs of moderate growth and dynamism, with some key features emerging from the latest data and analyses.
Geopolitical tensions, wars, and threats to trade barriers have contributed to lowering growth forecasts for the Italian economy, with inevitable repercussions on the real estate market, making the outlook for the coming months uncertain. Furthermore, banks have not yet eased their lending standards, primarily due to the uncertainty of the international geopolitical and economic environment, which could impact the economic conditions of Italian families, already strained by the loss of purchasing power resulting from the inflationary surge (Real Estate Market Observatory, Nomisma).
In this article, I want to provide a simple overview of the Italian real estate market, for those looking to purchase a home for themselves or as an investment with a little more awareness and less risk.
Let’s start with the numbers.
Real estate market in the first quarter of 2025
Overall, real estate sales are expected to increase slightly (+0.8%) compared to 2024, with a volume expected to reach 725,000 transactions in 2025. Preliminary estimates indicate a slight contraction or stabilization at around 689,000 units. There is some variability in the estimates, but the market is essentially stable.
According to preliminary estimates, in the first quarter of 2025, the house price index (IPAB) for homes purchased by households, for residential or investment purposes, decreased by 0.2% compared to the previous quarter and increased by 4.4% yoy (ISTAT datasource). The stabilization of the IPAB trend is driven by two factors:
- the acceleration in prices of existing homes (from +3.4% in the fourth quarter of 2024 to +4.9% in the first quarter of 2025)
- the sharp slowdown in prices of new homes (from +9.2% to +1.5%).
The factors that will influence house prices in the near future—in one direction or another—will be mainly six.
- Stabilization and decline in mortgage interest rates, making it easier to access credit.
- Consumer confidence thanks to the perception of a more stable economy.
- Increasing demand compared to limited supply, an imbalance that pushes prices higher.
- Energy efficiency and sustainability.
- High renovation costs and wage levels.
- Financial stability of Italian families with low levels of debt.
These trends are evident in a context of growing residential sales volumes: +11.2% the trend variation recorded in the first quarter of 2025 after the +7.6% of the previous quarter for the residential sector (Real Estate Market Observatory of National Agenzia delle Entrate).
Residential demand thus highlights a shift toward quality properties in peripheral areas, with flexible spaces and a greater focus on energy sustainability, value for money, and livability.
However, the scarcity of new construction and regulatory challenges limit the real estate supply, which is insufficient to meet growing demand, contributing to high prices and rents, especially in large cities.
Building Permits
In the first quarter of 2025, based on permits requested for the residential sector, a sharp quarterly decline is estimated in both the number of dwellings (-10.2%) and the usable floor area (-7.2%), adjusted for seasonal factors. Non-residential construction also recorded a significant decline (-11.4%) compared to the previous quarter. Compared to the same quarter of 2024, the residential sector showed a significant decline—both in the number of dwellings (-19.4%) and in usable floor area (-14.1%)—while the floor area of non-residential buildings decreased by 10.5%.
The share of homes purchased in the first quarter of 2025 by individuals who took out a mortgage rose to 45.8%, 4 percentage points higher than the previous quarter.
The average interest rate applied to the first installment dropped to 3.2%. The share of home purchases with first-time homebuyers’ incentives remained above 70%, and the share of newly built homes fell below 6%.
Housing Market Survey
The residential real estate market climate in the first quarter of 2025 is surveyed among Real Estate Agents through the “Italian Housing Market Economic Survey“. This survey, conducted quarterly by The Bank of Italy, Tecnoborsa, and OMI-Agenzia delle Entrate, is conducted among a sample of Real Estate Agents.
I can summarize it in a few key points.
In the first quarter of 2025, based on permits requested for the residential sector, a sharp quarterly decline is estimated in both the number of dwellings (-10.2%) and the usable floor area (-7.2%), adjusted for seasonal factors. Non-residential construction also recorded a significant decline (-11.4%) compared to the previous quarter. Compared to the same quarter of 2024, the residential sector showed a significant decline—both in the number of dwellings (-19.4%) and in usable floor area (-14.1%)—while the floor area of non-residential buildings decreased by 10.5%.
- In the first quarter of 2025, the balance between estimates of increases and decreases in house prices reached its highest level since the survey began.
- The share of agencies that closed at least one transaction in the reference quarter remained well above 80%.
- The final sales price averaged 7.3% lower than the seller’s initial asking price, the lowest discount since the survey began.
- The time between the assignment and the sale decreased from 5.7 to 5.2 months compared to the previous survey.
- The number of assignments to be processed in the first quarter of 2025 decreased for nearly 40% of agents compared to the previous period.
- The gap between offered and asking prices remains the primary reason for terminating sales assignments. Only 18% of agents reported difficulty obtaining a mortgage as one of the main reasons for terminating sales assignments.
- Agents’ expectations for the current quarter, compared to the same period last year, are slightly more favorable, both with respect to their own reference market and with respect to the national market.
So, good investments everyone!
Gianluca Boiago
Your Real Estate Expert
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