Italy’s Property Market Poised for Growth After Scandal

Political Stability Boosts Confidence in Italian Real Estate

In 2026, Italy’s real estate sector is showing robust growth amid strengthened political stability and regulatory reforms following a major building permits scandal in Milan. According to forecasts from Scenari Immobiliari, real estate transactions in Italy could rise by 8.4% to around €175.8 billion, with residential properties accounting for more than 80% of total activity. These growth projections surpass expected performance in Spain, the United Kingdom, Germany and France, highlighting Italy’s appeal to global investors.

Impact of the Milan Building Permits Scandal

The building permits scandal, which emerged in 2024 over the fast-tracking of approvals for high-rise developments, led to the freezing of over 100 projects in Milan — the country’s largest property market. The ensuing judicial investigations raised industry concerns about capital flight and investor caution. However, the feared exodus of foreign investment has not materialised, and heightened due diligence has become the new standard practice.

Market Response and Investor Sentiment

Industry leaders from firms such as Savills and Coima note that stricter, more transparent regulatory scrutiny has alleviated the main uncertainties that previously hindered investor engagement. A senior research executive at Swiss Life Asset Managers France emphasises that the Milan affair is a short-term issue, while momentum under the Meloni government and broader economic growth prospects are the overriding themes supporting investment inflows.

Supply Constraints and Future Challenges

Despite positive transaction growth, the Italian real estate market faces ongoing supply constraints. In 2025, newly built units made up only about 10% of total transactions, down from historical averages. Scenari Immobiliari warns that medium-term housing supply limitations could temper future growth if urban regeneration efforts and administrative engagement remain challenging.

As experts at International Investment report, the current dynamics of the Italian property market demonstrate that investor confidence can rebound even after serious regulatory setbacks. Enhanced transparency and political consistency form a solid basis for sustained growth, though the supply shortage remains a leading challenge for the market’s future trajectory.