Housing in a country that has had an inordinate influence in enriching European culture.
The economies and roles different cities play is, for me, the most striking thing. The metropolitan areas of Rome, Milan, and Bologna are diverging from the rest of the country. In the long term, their populations are increasing while areas around are depopulating in a country which also has the oldest median age in the EU. These demographic shifts will define future housing markets, increasing demand significantly in areas of economic opportunity while decreasing it elsewhere.
As the main economic hub, Milan has the highest prices and greatest strain of affordability. The cost of living is 21% higher than the rest of Italy but the average income is just 5% higher, with current annual rental growth of around 5%. This leads to smaller apartment sizes, with an average of 81m² compared to 92m² in Rome and 108m² nationally. High demand has made it highly attractive to investors, with the first Build to Rent scheme scheduled to complete this year.
New developments and hard refurbishments are increasingly popular across Italy, where 12% of residential transactions recorded in 2023 were on newly built dwellings. With the majority of housing stock built before the 1980s, the Italian government recently issued a series of incentives to improve the energy performance of buildings, along with tighter regulations for new developments, to ease the path towards net zero.
Meanwhile, new development in Rome is made more difficult by its rich archaeological heritage that often appears during construction projects, making refurbishment more common. Rome also has much more social housing, although as a country this tenure makes up only 4% of housing stock. Traditional social housing developed after the Second World War was known as ‘Edilizia Residenziale Pubblica’ (ERP). This created ‘INA Casa’ neighbourhoods which sought to rebuild the nation physically and psychologically, resulting in 350,000 units of housing by 1963. Unlike modernist high-rises, they were designed on a more intimate human scale and incorporated local construction materials.
In 2008 the concept of ‘Edilizia Residenziale Sociale’ (ERS) expanded the definitions of ERP to include local experiments and partnerships with private actors to meet a more diverse range of housing needs.
But generally speaking Italy is a nation of owners, who make up 80% of households. The ratio of non-financial assets, which includes real estate, to gross wealth is higher in Italy than the UK and the US. This affirms the importance of property as an asset class for Italians, where many have access to significant equity. Historically, less than 50% of home purchases involved a mortgage, meaning most are completed solely through cash.
