More expensive homes and tougher purchases. The Italian market towards 2027

Prices rise but buyers must be able to pay

The housing market can slow without prices falling, because owners are not always willing to adjust their asking prices immediately and buyers cannot increase their income at will; in between, properties remain on the market for longer, searches shift to other neighbourhoods and some intentions to buy never become contracts. This is the key to understanding the final phase of 2026, avoiding both the idea of uniform property growth and premature declarations of a widespread crisis. The balance depends on households’ ability to afford the overall price, financing conditions and the availability of suitable homes, while limited supply can keep asking prices high even when transactions lose momentum. For anyone buying, selling or investing, distinguishing between these factors is more useful than a single forecast for next year, because the same national average can encompass properties that quickly find a buyer and others that require price reductions, work or a different sales strategy.

Provisional Istat data for the second quarter of 2026 provide a measure of this divergence: prices of homes purchased by households are up 4% compared with the same period in 2025, while residential transactions recorded by the Italian Revenue Agency’s Property Market Observatory are essentially flat, with an increase of 0,1%, following 4,4% in the first quarter. Price increases affect both new homes, at 5%, and existing ones, at 3,7%, but are slowing compared with the first few months of the year; it is therefore incorrect to describe the entire six-month period as an across-the-board surge in transactions. The important point for owners is that slower sales can precede a revision of expectations, while for buyers, average price growth does not prove that every asking price is justified. A home’s actual price depends on its characteristics and context, and negotiations should begin with up-to-date comparisons with similar properties, rather than mechanically applying the national change to the value one hopes to achieve.

Transaction prices must also be distinguished from advertised prices, because they describe different stages of the market and cannot be added together to construct a more pronounced trend. Immobiliare.it Insights’ Market Monitor for the first half of 2026 reports asking sale prices rising by 4,3% year on year and rents by 2,9%, with average values of around 2.200 euros per square metre for purchases and 14,7 euros for rentals; these are benchmarks for the supply observed, not a rate applicable to every property. The common indication across the surveys is that housing continues to cost more, while the pace of transactions is not accelerating in the same way, making costs that do not appear in the published price crucial: taxes, purchase expenses, initial work and future maintenance. An apparently cheaper home may require a greater overall outlay than one that is already energy-efficient, particularly when the difference has to be financed and the work prevents it from being used or let for several months.

The constraints of income and credit

The affordability measure developed by Immobiliare.it Insights makes the financial constraint more visible: at the end of the first half of the year, its model shows that a single income provides access to 30,5% of the supply for sale and 13,4% of that for rent, while with two incomes the shares rise to 58,4% and 56% respectively. These are not percentages of Italians authorised to buy, nor a direct measurement of excluded households, but indicators constructed by relating supply, incomes and access conditions. Their significance for property wealth is that a second salary continues to have a major impact on the ability to live where one works, while a price supported by a narrow pool of buyers able to pay can become vulnerable if that demand moves elsewhere. For rental investors, the issue also concerns the continuity of receipts, because a theoretically achievable rent does not always match what a tenant can afford for years without difficulty; affordability is not just a social issue, but a component of the quality of property income.

The cost of money remains important, but should not be portrayed as a predetermined sequence of rises: on 29 October 2026, the European Central Bank kept its three official rates unchanged, leaving the deposit rate at 2,50%, the main refinancing rate at 2,65% and the marginal lending rate at 2,90%, following September’s increase. The ECB itself reiterates a data-dependent, meeting-by-meeting approach, without committing to a predetermined path, while energy continues to pose a risk to inflation and growth. For a household, this means comparing actual offers and safety margins, rather than turning analysts’ expectations into definite repayment amounts; an existing fixed-rate mortgage does not change its repayments because an official rate rises, while a variable-rate mortgage responds to its contractual terms and a new fixed-rate deal also depends on market benchmarks and the bank’s spread. A proper comparison includes the term, total cost and remaining liquidity, not just the initial repayment that makes a higher price appear affordable.

Mortgage data also require different components to be distinguished: according to Nomisma’s second Observatory report of 2026, total lending to households fell by 2,1% in the first quarter, but the result reflects a 58,7% decline in mortgage transfers and replacements, while lending for new purchases rose by 6,6%. Reading the overall figure as an indiscriminate credit squeeze would therefore produce an incomplete picture, just as it would be excessive to conclude that the increase in new loans eliminates the affordability problem. Banks can continue to finance selected borrowers without making housing affordable for those with insufficient incomes or little initial capital, while extending the repayment period can reduce instalments but increase the overall cost. For buyers, the real safety margin lies in retaining resources for unforeseen expenses and maintenance after completion of the deed of sale, because financing that is affordable on paper can become fragile if it absorbs all available liquidity and forces them to take on further debt to make the home habitable.

The geography of demand is changing

The growth in provinces and smaller towns described by Confedilizia helps explain what is happening beyond the most visible markets: between 2019 and 2025, transactions increased by 32,7% in municipalities other than provincial capitals, compared with 15,5% in provincial capitals, while in smaller towns the increase reached 42,3%. These figures alone do not prove that every move is due to expensive housing, because the search for space, work, services and transport links can also play a part, but they make it clear that demand is not confined to major cities. Buyers moving away from the centre must, however, include transport and time in their budgets, while investors must consider how easy it will be to find another buyer or a tenant when they wish to exit the investment. A lower entry price does not eliminate the risk of poor liquidity, and percentage growth in transactions can be high even when the local market remains small and dependent on a handful of economic factors.

Milan deserves attention for the symbolic significance it has acquired in the national property narrative, but the risk of imbalance must be distinguished from a prediction of a crash. In UBS’s Global Real Estate Bubble Index 2026, the city enters the moderate-risk category with a score of 0,50, compared with 0,01 in 2025: this is an indicator signalling strains, not a percentage probability of the bubble bursting, nor a deadline by which prices must fall. Beyond the ranking, the economic problem emerges when an investment can be justified only by further capital appreciation, while the achievable rent no longer adequately compensates for the price, expenses and risk. Even in an attractive city, the neighbourhood and the quality of the property can produce very different results, while buyers purchasing a home to live in must distinguish the personal value of its location from the financial return they could reasonably expect if they were forced to sell or let it sooner than planned.

The gap between energy-efficient homes and properties requiring upgrading makes it even less useful to think solely in terms of cities, because two nearby flats can require very different amounts of capital and time before offering the same living comfort. Sellers may perceive their property’s value through the prices of renovated homes, while buyers deduct the cost of work, the risk of overruns and the period when it cannot be used, creating a gap that slows negotiations even without a genuine fall in demand. Assessing value for money therefore requires a full cost calculation, including work inside the home and foreseeable work on communal areas, without assuming that every expense will be recovered in the final price. Energy efficiency can improve appeal and reduce consumption, but the premium the market recognises must be verified; similarly, a home requiring renovation can be an opportunity only if the discount compensates for the work needed and leaves a margin for unforeseen costs, not simply because its price per square metre is below the neighbourhood average.

Preparing for 2027 with more realistic budgets

The scenario set out by Nomisma in July 2026 forecasts a stabilisation in transactions during the current year, a decline in 2027 and a return to growth in 2028, with prices still rising in nominal terms but at a progressively slower pace. This is a forecast to be assessed against incoming information, not the final results of a year that has yet to end, and its usefulness lies above all in suggesting caution to anyone building an investment around a quick resale. A market with fewer transactions can require more time to sell even when average values hold up, while a nominal increase does not necessarily amount to a real gain after inflation and expenses. For owners, the safety margin therefore depends on their ability to retain the property without having to accept an urgent sale; for buyers, it depends on the affordability of the transaction even if the expected appreciation fails to materialise and the holding period extends beyond the original plan.

Those who need to sell should start with an up-to-date valuation and the quality of demand from people who actually view the property, distinguishing curiosity and requests for information from a genuine ability to secure financing; buyers, meanwhile, should compare at least one normal scenario with a less favourable one, in which more work is needed, disposable income falls or selling their previous home takes longer. For rental investors, the calculation must include vacant months, maintenance, taxes and management, rather than dividing twelve theoretical rent payments by the purchase price alone. These checks do not require predicting every ECB decision or every geopolitical turn, but recognising which variables could undermine one’s personal financial balance; a home can remain a useful asset even when the market slows, provided it was not bought with a financial margin so narrow that a manageable setback becomes a problem for one’s wealth. The quality of a decision is also measured by the ability to wait when the market does not offer the desired conditions.

The conclusion of this preliminary year-end assessment is therefore a more selective market, in which resilient prices should not be confused with ease of selling, and household caution does not necessarily mean that the need for housing has disappeared. Demand still exists, but is distributed across areas and properties offering different combinations of cost, services and quality, while the gap between prices and incomes can shift it even before producing a clear correction in property values. For 2027, the useful question is not just how much property prices will rise or fall, but who will be able to afford that particular home and how consistently, because this spending power underpins both tomorrow’s buyer and the tenant who sustains the owner’s income. Protecting property wealth methodically requires reasonable entry prices, acknowledged expenses and sufficient liquidity, rather than the conviction that a favourable national average can compensate for any mistake in an individual transaction.