The real estate sector is entering a pivotal phase as we approach 2026, with significant implications for buyers, sellers, and investors alike. The historical patterns suggest that the market operates on an 18-year cycle, indicating a potential downturn in the coming years. With the recent performance of the Italian residential market showing growth in transactions but signs of price stabilization, understanding these trends becomes essential.
This article delves into the intricacies of the current real estate environment, highlighting the factors influencing the market dynamics, and forecasting what lies ahead.
Table of Contents:
Current state of the Italian residential market
As of 2026, the Italian residential market is undergoing a transformative period. The number of property transactions increased by 9.2% in the first three quarters compared to the same period in 2026, signaling a robust recovery. Major urban centers like Rome and Milan have seen a 6.5% growth in real estate sales, although this is slightly below the national average. This trend indicates a shift towards stabilization after a period of rapid recovery.
Price trends and stability
Despite the rise in transaction volumes, the Italian market is starting to experience a slowdown in price growth. After an estimated average increase of 3% throughout 2026, projections for 2026 suggest a more modest growth of around 1%. This shift is indicative of a market striving for equilibrium, especially in urban areas where property prices have escalated significantly in recent years.
In the ten major Italian cities, prices are expected to rise by merely 0.7% in 2026, down from 1.4% in 2026. This deceleration can be attributed to a growing disconnect between asking prices and the purchasing power of families, leading to a more cautious approach among buyers.
Shifts in buyer behavior and intentions
Another notable development is the resurgence of buyer confidence. Unlike the previous two years, where rising interest rates dampened enthusiasm, 2026 saw a significant increase in purchase intentions. The percentage of families looking to buy a home rose from 2.2% in the first quarter to 3.2% by the end of the year. This is a positive sign, reflecting a renewed sense of optimism due to more stable credit conditions and clearer macroeconomic prospects.
Demand vs. supply: A structural imbalance
However, the report reveals a persistent structural imbalance between supply and demand. While demand is primarily focused on three-bedroom apartments, comprising 38% of the interest, the market supply remains skewed towards four-bedroom units. This misalignment poses challenges for prospective buyers, particularly in finding properties that meet their needs.
In terms of average pricing, the data indicates a stabilization at around 1,743 euros per square meter in 2026, following fluctuations over the last several years. Interestingly, after a decline in living space sizes until 2026, the average size of properties has begun to increase, suggesting a potential return to larger homes, especially in peripheral areas.
The role of financing and new constructions
Financing continues to play a crucial role in the real estate market, with mortgage-backed transactions growing significantly. In 2026, properties purchased with loans accounted for 46.3% of all transactions, with a notable increase in the average mortgage amount, which rose to 141,830 euros. This trend illustrates the importance of credit in facilitating home purchases, despite the ongoing challenges in securing financing for lower-value properties.
New constructions remain concentrated in urban centers, particularly in northern cities. The demand for new build homes, particularly three-bedroom apartments, is high, yet the availability is limited. This imbalance highlights the need for strategic planning and development to meet the evolving needs of the market.
Rental market adjustments
The rental market has also seen significant changes, transitioning into a phase of stabilization after substantial growth in 2026 and 2026. By the end of 2026, rental prices showed a modest annual increase of 1.7%, with long-term contracts making up a significant portion of the market. However, there are signs of a slowdown in rental price growth, reflecting a more balanced approach to housing affordability.
In summary, as we approach 2026, the Italian real estate market is poised for a period of adjustment and stabilization. While transaction volumes remain strong, price growth is expected to moderate, and buyer confidence is returning. Stakeholders in the market must navigate these dynamics carefully to prepare for the challenges and opportunities that lie ahead.
