Bank of Italy survey: House prices continue to rise, supply fails to keep up with demand

According to the Bank of Italy's traditional quarterly survey on housing market conditions (Sondaggio congiunturale sul mercato delle abitazioni), residential property prices in Italy will continue to show steady positive growth in the third quarter of 2025. However, average transaction discounts continue to narrow, and the average time to sell a home has reached historic lows. At the same time, buyer demand is recovering, while supply continues to decline.

Prices are rising steadily and almost everywhere.

In the third quarter of 2025, the net balance between estimates of housing price growth and decline increased to +7 percentage points (versus +5 percentage points in the second quarter) and was significantly higher than for the same period in 2024. A positive balance was recorded across almost the entire country, with the exception of the South of Italy (Mezzogiorno), where it remains negative, although it has significantly improved compared to the previous quarter.

The most pronounced price increases were observed in major cities in Northeast and Central Italy, where the proportion of agents reporting price increases increased even further.

The average discount from the original asking price decreased slightly to 7.5% (from 7.8% the previous quarter) and remains at its lowest level on record. In the largest cities of the Northeast, discounts fell below 5%. The average home sale period increased slightly to 5.6 months (from 5.4 months), but remains near its historical low.

Demand is recovering, supply continues to decline

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

Access to mortgages remains favorable

Problems with obtaining credit remain minimal: only 19% of agencies cited financing difficulties as one of the main reasons for contract termination. The share of transactions financed by mortgages increased to 65.9%, and the loan-to-value (LTV) ratio reached 78.4%—both indicators have returned to levels seen before the ECB rate hike cycle began in July 2022. Therefore, lending terms can be considered generally comfortable for buyers.

Rents continue to rise, but at a slower pace.

Rent growth remains significant, although the pace has slowed slightly: the net balance between estimated increases and decreases was +41 percentage points. Most agents attribute the rise in rent primarily to a reduction in the supply of long-term rental housing. This factor is particularly pronounced in cities and, according to agents, is largely due to owners' preference for short-term or daily rentals.

The Impact of Short-Term Rentals (like Airbnb)

The share of agencies considering the short-term rental phenomenon significant has increased slightly to over 50%. Of these, over 80% note a significant impact on long-term rental rates (over 30 days), with over 60% rating this impact as particularly strong.

At the same time, the perceived impact of short-term rentals on sales prices has weakened somewhat across the country. The main influence remains the reduced supply of properties for sale: approximately 40% of operators cite this effect.

Market forecasts are becoming more optimistic

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

Regarding expected sales prices in the fourth quarter of 2025, agents on average predict a slight decline, but net balances turned out to be significantly less negative than a year earlier, which indicates a gradual return of confidence among market participants.