Bank of Italy survey: House prices continue to rise, supply fails to meet demand

According to the Bank of Italy’s regular quarterly examination of housing market conditions, residential property prices in Italy are expected to maintain their positive growth trend during the third quarter of 2025. However, the average discounts on transactions continue to decrease, reaching historic lows in the time required to sell a home. Meanwhile, demand from buyers is reviving, yet supply keeps falling.

Prices are steadily increasing almost everywhere.

In the third quarter of 2025, the net balance between estimates of housing price increases versus decreases rose to +7 percentage points (up from +5 percentage points in the second quarter) and was notably higher than the same period in 2024. A positive balance was observed across nearly the entire nation, except for Southern Italy (Mezzogiorno), where it remains negative, though it has improved significantly from the previous quarter.

The most notable price hikes were seen in major cities in the Northeast and Central Italy, where the proportion of agents reporting price rises also increased.

The average discount from the initial asking price slightly decreased to 7.5% (down from 7.8% the previous quarter) and remains at its lowest recorded level. In the largest cities of the Northeast, discounts fell below 5%. The average time to sell a home increased slightly to 5.6 months (from 5.4 months), yet remains close to its historical low.

Demand is picking up, supply continues to lessen

The negative balance between estimates of growth and decline in potential buyers has improved significantly, particularly in large cities and metropolitan areas. On the other hand, real estate agents continue to report a drop in the number of new sale orders. The net balance for the current portfolio of orders stood at -32 percentage points (-30 percentage points in the previous quarter and -25 percentage points the previous year), and for new orders received, it was -30 percentage points.

Access to mortgages remains favorable

Issues with securing credit remain minimal: only 19% of agencies cited financing difficulties as a key reason for contract termination. The proportion of transactions financed by mortgages rose to 65.9%, and the loan-to-value (LTV) ratio reached 78.4%—both metrics have returned to levels seen before the ECB's rate hike cycle started in July 2022. Therefore, lending conditions can generally be considered favorable for buyers.

Rents continue to rise, but at a slower rate.

Rent increases remain significant, although the pace has eased slightly: the net balance between estimated rises and falls was +41 percentage points. Most agents attribute the rent growth mainly to the reduced availability of long-term rental housing. This trend is especially pronounced in urban areas, largely due to property owners preferring short-term or daily rentals.

The Impact of Short-Term Rentals (such as Airbnb)

The proportion of agencies considering the short-term rental trend significant has slightly increased to over 50%. Among these, over 80% note a considerable impact on long-term rental rates (over 30 days), with more than 60% describing this impact as particularly strong.

Meanwhile, the perceived influence of short-term rentals on sales prices has somewhat weakened across the nation. The primary effect remains the reduced supply of properties for sale: about 40% of agents mention this factor.

Market forecasts are becoming more optimistic

Agents' expectations regarding their own regional market and the Italian real estate market as a whole have improved significantly in comparison to both the previous quarter and the same timeframe in 2024.

Concerning expected sales prices in the fourth quarter of 2025, agents, on average, foresee a slight decline, but net balances turned out to be much less negative than a year ago, indicating a gradual restoration of confidence among market participants.