The Nomisma Report: A New Economic Reality

Global Headwinds and Local Pain

The macroeconomic picture painted by Nomisma’s Chief Economist, Lucio Poma, highlights the forces dampening confidence. Globally, persistent "core" inflation is preventing rate cuts, which has led to a steep decline in mortgage volumes (down 29% this year) and a 13% drop in mortgage-backed sales.

• Erosion of Purchasing Power: The most significant domestic factor is the widening gap between inflation (rising 5.5%) and wage growth (3.2%). This erosion of purchasing power, combined with soaring costs of living, has severely penalized real estate prospects for ordinary Italian families.
• The Demographic Winter: Adding long-term pressure, is the shifting demographic landscape. For the first time, single-person households (33%) outnumber households with children (32%). This structural change, alongside a large number of inactive people reducing the available workforce, will impact future economic and housing decisions profoundly.

Sales Correction and Price Stagnation

The cooling effect of prudent credit policies is starkly visible in transaction numbers. Residential sales are forecast to decline to 608,000 by 2026 (a decrease from 780,000 in 2022).

• Sluggish Price Growth: Residential property prices across Italy's 13 main cities are showing only sluggish growth (averaging +1.4%). While Milan continues to lead with modest appreciation (+1.3% half-yearly in H2 2023), most markets are stalling. Nationally, prices are forecast to see nominal growth of only +0.6% in 2024–2026, which translates into a real-terms decline when factoring in inflation. The market is not collapsing, but it is currently failing to deliver real capital appreciation.

The Shortage Paradox and the Rental Surge

The difficulty in purchasing has created a definitive shift in the rental market. Over the past year, 7.3% of demand has migrated from buying to renting, fueling rent increases (up 3.8% annually) across major cities like Milan and Bologna.

• The Scarcity Issue: As Nomisma CEO Luca Dondi explains, the lack of supply is not due to a physical shortage, Italy has ample unoccupied second homes. However, owners are pulling back from traditional long-term leases due to the perceived risks and the vastly superior yield of short-term rentals.
• The Yield Gap: The difference in returns is staggering: the yield gap between the free market and short-term rentals in Venice is 4.4% vs. 14.2%, and in Rome, it is 5.7% vs. 11.7%. This financial incentive is legitimately pushing owners away from traditional supply, creating an acute housing shortage.

The Strategic Opportunity

The Nomisma report confirms that the Italian real estate market is splitting into two distinct realities. For the average Italian family, the next few years will remain difficult due to credit and wage constraints.

However, for the discerning international investor, this environment presents a strategic opportunity.

• The Value-Add Mandate: The price stagnation of homes in "good condition" (rising only +0.5%) means there is a moment to acquire assets at fair value before interest rate cuts eventually ease financing.
• The Institutional Necessity: The rental paradox is a direct call for specialized operators. Investments in professionalized rental management and strategic initiatives like social housing models (as admired in Milan) are essential to unlock trapped supply and capitalize on the surging rental demand.

The future of value lies not in speculation, but in strategic repositioning and solving the structural inefficiencies the Nomisma report has so clearly identified.