Home, residential jumps 11% in three months as rates fall

Geopolitical fears, economic uncertainty, and mortgage rate trends were put aside by those who chose to buy a house in the first three months of this year. The volumes of the first quarter were expected as a test bench to verify the market's resilience. And so it was. In the first quarter of 2025, according to the Inland Revenue Observatory, the Italian residential market grew significantly compared to the same period last year. House purchases and sales increased by 11.2% nationwide, with over 172,000 units traded, a good 17,000 more than a year earlier. This positive trend affected both capital cities and smaller municipalities. The areas of Northern and Central Italy showed the highest growth rates, with increases exceeding 12%, while in the South and the Islands the expansion was more contained, at around 6-7%. The good performance in 2024 had already certified the growth in residential home sales, which rose by a modest 1.3% to 720,000. Last year, trade thus returned to growth at an estimated value of around EUR 114 billion. At the same time, the average surface area of the homes purchased also rose during the quarter, with an increase of 12.4 per cent. The share of purchases made by natural persons with 'first home' status rose to 72.5%, while 45.8% of purchases were financed by mortgage loans. The latter share increased by about four percentage points compared to the previous quarter, helped by a drop in interest rates: the average rate applied to the first instalment fell to 3.22%. However, the share of newly built homes remained marginal, falling below 6%.A positive dynamic was also observed in Italy's large cities, with an average growth in purchases and sales of 9%. The most marked increases were recorded in Turin and Genoa (over 12%), followed by Rome (+10.7%), Bologna (+9.3%) and Palermo (+8.8%). Milan and Naples show smaller but still significant increases, while Florence is the only city to show a contraction, with a 6.2% drop. Rome stands out for having the highest percentage of purchases with "first home" concessions (over 85%), while Milan is the city with the largest share of new constructions sold, although slightly down on previous quarters.And what about rents? The residential rental market shows more moderate growth: in the first quarter of 2025, approximately 257,000 new rental contracts were registered, an increase of 1% compared to the same period in 2024. The increase is most notable in high-pressure housing municipalities, where it stood at 1.4%, while in less-pressured municipalities the change was almost zero. The total annual rent agreed reached approximately EUR 1.9 billion, up 5% year-on-year, with increases in all market segments, especially for agreed, transitional and student contracts. Ordinary long-term contracts, on the other hand, declined. In May 2025, ISTAT reported a significant increase in consumer confidence, particularly with regard to general economic expectations. This bodes well for the following quarters in terms of real estate purchases and sales.Finally, with regard to house prices, according to the most recent data available relating to the fourth quarter of 2024, there was a trend increase of 4.5% in Italy, driven mainly by new construction, whose prices rose by 9.4%, while those of existing homes rose by 3.4%.