Residential Momentum Remains Strong

Italy’s housing market entered the second half of 2026 with solid momentum. House prices increased 5.2% year-on-year in Q1 2026, supported by stronger transaction activity and improving demand.

New-build prices rose 6.7%, while existing homes gained 4.8%. Residential sales also increased 4.4% year-on-year, with total transactions forecast to grow by approximately 8.4% across 2026.

Price growth remained concentrated in major cities. Milan led with a 6.3% increase, followed by Rome at 5.0% and Turin at 3.6%. National asking prices averaged €2,188 per square metre in April.

However, the financing environment has become less supportive. The European Central Bank raised its deposit rate to 2.25% in June 2026, weakening the lower-cost mortgage conditions that supported the earlier recovery. 

Quality Assets Continue to Attract Capital

Higher interest rates have not significantly reduced demand for premium assets. Commercial property investment reached €12.5 billion in 2025, up 23% year-on-year, with international investors contributing 58% of total capital.

Luxury property also remained resilient. International buyers now account for around 35% of Italy’s prime market, supported by continued demand for lifestyle properties and high-net-worth relocation.

Residential rental fundamentals remain attractive, with average gross yields of 7.23% nationally. Yields ranged from 9.17% in Catania to 5.26% in Milan.

Competition is strongest for Grade-A offices, energy-efficient buildings and prime coastal properties, where limited supply continues to support values.

Outlook

Italy’s property market is expected to remain positive but more selective.

Higher financing costs may slow leveraged purchases, while cash-rich buyers and international investors should remain active. Well-located, energy-efficient and income-producing assets are likely to outperform as the wider market moves towards more measured growth.