In 2025, the Italian real estate market is demonstrating steady and confident growth, outperforming most of its European counterparts. After several years of volatility — shaped by the pandemic, rising inflation, and evolving consumer behavior — the sector is entering a more stable and investor-oriented phase. While many EU countries are experiencing stagnation or price corrections, Italy stands out for its resilient demand, sustained investment activity, and growing international relevance.
This report offers a detailed overview of Italy’s real estate landscape in 2025, set within a broader European context. It outlines both risks and opportunities, with a focus on the interests of foreign investors and property owners.
European Market Overview: Post-Crisis Stabilization
In 2025, the European real estate market continues to adjust to the lingering effects of the pandemic and broader economic pressures. After a strong rebound in 2021–2022 and a slowdown in 2023–2024, many countries are now seeing slow and uneven growth. Markets like Portugal, Croatia, and Italy are leading in price gains, supported by stable domestic demand and renewed interest from international buyers.
Conversely, Germany, Sweden, Finland, and the Netherlands are experiencing downward adjustments, especially in the new-build sector, where developers are increasingly offering incentives to maintain sales volumes. High mortgage rates and reduced purchasing power continue to weigh heavily on these markets.
Italy Leading the EU in 2025
According to the Scenari Immobiliari – European Outlook 2025 report, Italy is among the top-performing EU countries in terms of real estate turnover. Transaction volumes rose by 3.4% in 2024 and are projected to increase by a further 5.7% by the end of 2025 — a rare blend of momentum and stability in today’s European market.
This growth is supported by improving macroeconomic indicators, growing investor confidence, and a rebound in domestic consumption. Unlike some overheated markets, Italy’s supply-demand dynamic remains relatively balanced, making it more attractive for long-term investment.
Regional Highlights: Milan, Venice, Rome
Milan continues to lead the market, with average property prices reaching €5,250 per square meter — a 7.5% year-on-year increase. Its role as Italy’s economic and cultural hub continues to attract both domestic and international capital.
Venice follows closely, with a 6.8% rise in prices. Limited supply and strict preservation regulations make the city highly competitive, particularly among foreign buyers.
Real estate in Rome also shows solid performance, with prices up by 6.1%. Demand is concentrated in central and historic neighborhoods, as well as areas undergoing redevelopment. A notable trend is the transformation of older buildings into residential apartments and boutique hospitality formats.
National Pricing Trends in 2025
The national average property price in Italy stands at €2,050 per square meter. Key regional averages include:
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Milan — €5,250
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Rome — €3,650
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Florence — €4,200
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Venice — €4,780
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Turin — €2,150
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Palermo — €1,500
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Bari — €1,720
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Trentino-Alto Adige — €4,350
While southern regions remain more affordable, they are seeing faster appreciation — particularly in areas with strong tourism potential.
Among the top-performing areas in 2025 are:
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Milan’s suburban zones (+10.2%)
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Bolzano and Trento (+9.1%)
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The Ligurian coast (+8.6%)
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Sardinia (+7.4%)
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Apulia and Calabria (+6.9%)
Growth in these areas is driven by limited new development, increased international tourism, demand for short-term rentals, and improved transport infrastructure.
Market Challenges
Despite its current strength, Italy’s property sector faces structural constraints that could limit long-term scalability.
First, new housing development remains insufficient. Construction activity is still below pre-2008 levels, which contributes to supply shortages in both cities and rural areas. Second, much of the country’s housing stock is outdated — over 60% of residential buildings were constructed before 1980 and often require significant renovation to meet modern standards.
In addition, the market is hampered by bureaucratic inefficiencies, especially in the permitting and planning process. Urban centers, particularly historic districts, also face supply restrictions due to preservation regulations. Furthermore, many properties fall short of the EU’s energy efficiency standards, increasing operational costs and regulatory risks.
While these challenges complicate modernization efforts, they also create clear investment opportunities in restoration and energy-efficient redevelopment.
Why Italy Appeals to Foreign Investors
Italy’s appeal to foreign investors goes well beyond lifestyle and aesthetics. The country offers a favorable regulatory and tax environment that supports long-term investment.
The Flat Tax Regime allows new tax residents to pay a fixed annual tax of €100,000 on all foreign-sourced income — a structure that has proven highly attractive to high-net-worth individuals.
Through the Investor Visa program, non-EU nationals can obtain residency by investing between €250,000 and €2 million in qualifying sectors, including startups and government bonds. This program is considered one of the more transparent and accessible investor pathways in Europe.
Additionally, generous tax credits for renovation and energy upgrades — most notably the Superbonus 110% — significantly reduce the costs of rehabilitating older properties, especially in central urban areas.
Foreign demand remains strong in 2025. U.S. buyers — particularly from California, Florida, and New York — are seeking second homes or lifestyle investments. Investors from the Middle East continue to focus on high-end assets in Rome and Tuscany. Buyers from CIS countries often target income-generating properties or heritage buildings with renovation potential. Meanwhile, investors from Germany, Switzerland, and the UK remain active in northern premium markets.
Unlike in some EU jurisdictions, Italy places no major legal restrictions on foreign property ownership, making it one of the most accessible markets in Europe for non-residents.
EU-Wide Outlook: Soft Landing or Renewed Growth?
According to Scenari Immobiliari and Il Sole 24 Ore, most EU housing markets are undergoing a soft landing rather than a sharp correction. Inflation and rising interest rates have cooled previous surges, but structural demand remains intact across much of the continent.
In 2026, average property price growth across the EU is expected to range between 3% and 4%, signaling a broader trend of normalization. Northern European markets — notably Germany, Sweden, and the Netherlands — are likely to see flat or mildly negative growth, with affordability and rate sensitivity remaining key concerns.
In contrast, southern markets — particularly Italy, Portugal, and Greece — are forecast to continue their upward trajectory. This ongoing growth is fueled by relatively accessible price points, strong tourism and rental markets, supportive tax and visa policies, and a greater resilience to monetary tightening.
Italy is especially well-positioned to lead this southern resurgence, thanks to its pricing flexibility, regional diversity, and robust international buyer base.
Italy’s Long-Term Investment Outlook
Italy is increasingly recognized as a long-term safe haven for real estate capital — not only for its strong fundamentals, but also for its lifestyle value and institutional stability.
What makes Italy distinctive is the ability to combine:
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Moderate, sustainable price appreciation
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Diverse property types and pricing across regions
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Strong legal protections and transparent ownership laws
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Investor-friendly tax incentives
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Relative insulation from broader European volatility
