How Italy can turn things round to make housing affordable

Housing is a key issue in public policy. When public policy and resources are scaled back, the issue becomes a hot topic. National and local plans are launched that seek to combine public and private funding to protect the most vulnerable section of the population: those on low incomes.

With the era of affordable and social housing schemes now over, the gradual shortage of public funds has favoured financial instruments backed by private or mixed capital, involving the Cassa Depositi e Prestiti, pension funds and banking foundations. These have performed well, but with resources falling short of requirements and failing to reach entire areas of the country, which are hampered by structural deficiencies. Soaring construction costs and the energy crisis are now calling into question the sustainability of investments aimed at rent and sale price controls. The risk is that the entire residential sector could grind to a halt.

Protests against rising house prices and rents are entirely justified, but they must not cloud our judgement. The ideological spin places the blame on the private sector, particularly property funds, which are at the forefront of major urban regeneration projects. The root of the problem, however, lies in the lack of tools and resources capable of bridging the gap between house prices and household incomes. The National Housing Plan, involving various ministries, Invimit SGR and private funds, and the EU’s Affordable Housing Plan, are the first responses.

Beyond the slogans, there is no exclusively public-sector alternative capable of immediately mobilising the same financial resources and implementation capacity as the private sector, without coming up against the constraints of public spending every year. According to the OECD and Housing Europe, the stock of public housing in Italy accounts for 4 per cent of all dwellings, compared with 3 per cent in the Netherlands, 24 per cent in Austria, 20 per cent in Denmark, 18 per cent in France and 16 per cent in the UK.

If anything, the private sector can be criticised for having invested too little in the residential rental market – partly due to financial costs and tax disadvantages – without creating a market with an international reach. According to Eurostat, there are fewer than 5 million rental properties in Italy, compared with 20 million in Germany and 9–10 million in France and the UK. The Italian Revenue Agency notes that over 33 million homes, 93.2 per cent of the housing stock, are owned by individuals; fewer than 2.5 million, 6.8 per cent, are owned by non-individual entities. Property funds account for a minimal proportion of this latter category. According to the 2026 Report by Scenari Immobiliari, by the end of 2025 residential property accounted for just 9.7 per cent of funds’ property portfolios, compared with 56.5 per cent for offices.

Consolidated and mature markets are better able to manage the tensions between supply and demand, helping to rebalance rents and prices. The Italian market is far from this situation. The housing issue is uneven: it mainly affects the most attractive cities, which are impacted by migration, tourist flows and an ageing population. According to property market analysts, between 2015 and 2025, rents rose by 50 per cent in Milan, 45 per cent in Bologna, 40 per cent in Rome and 35 per cent in Turin, compared with a national average of less than 20 per cent.

It is a classic market failure: growing demand, hampered by low incomes and a loss of purchasing power, meets with scarce supply, which is geared towards the most profitable segments still perceived as low-risk. Attractive cities draw investment in the upper-middle segment, whilst gentrification drives out the lower-middle classes and fuels polarisation.

A transparent social pact is needed between the public and private sectors: clear rules, certainty regarding timelines and costs, and urban planning, tax and financial incentives. The private sector must be made aware, in measurable terms, of both the social service required and the concessions granted. The tradition of residents’ co-operatives must also be revived, with subsidised capital and the allocation of homes on a permanent tenancy basis, thereby overcoming the dichotomy between ownership and renting.

The key is not to demonise anyone, but to involve everyone in a new wave of investment in affordable housing. Italy lags behind the rest of Europe in both the public and private sectors: this is precisely why it has great potential to turn things around.