In Italy, house prices have fallen relative to incomes, according to Eurostat

Is the housing crisis really an emergency? Is it one across the whole of Europe, from Madrid to Berlin via Paris in the north and Rome in the south? And have average house prices really risen faster than average incomes, thereby contributing to the impoverishment of the poorest and the enrichment of the richest? Eurostat, the European Union’s statistical office, has done what it does best: analysed the figures. The picture that emerges goes against the grain. Let’s look at the data, then try to interpret it. The index representing the ratio of house prices to income rose by 6.8 per cent in 2025 (the last year analysed) compared with ten years earlier: but it increased in 17 EU countries and fell in 10. Italy is among the latter. In Germany, the ratio remained stable; it fell the most in Romania (-42.8 per cent), but Italy ranks fifth in terms of declines (with a fall of around 10 per cent), preceded by Cyprus and followed by Malta. Among the larger countries, France, Poland and Sweden also saw prices fall relative to income. Portugal topped the list by a wide margin (+60.8 per cent), followed by the Netherlands (+34.4 per cent) and Spain (24.5 per cent).

This is a snapshot of a decade still marked by the 2008 financial crisis, which lasted in Europe until 2012 and was followed by the pandemic. Therefore, to reach reliable conclusions, we need to take a longer-term view. Eurostat provides us with another revealing indicator: the price-to-income ratio based on the average trend from 2005 onwards. We can see that house prices peaked in 2007 on the eve of the Lehman Brothers collapse, fell to a low in 2014, recovered fully by 2021, then fell again until 2024, when a recovery began; however, this remains partial, as by 2025 prices have barely reached the twenty-year average.

The first obvious observation is that the housing market, too, follows the cyclical trends of the markets. But what is less obvious is that the recovery, which began two years ago, has merely brought us back to the average. Cross-referencing the two indices shows that housing costs more in countries where average incomes have risen the most. This is demonstrated by the Iberian boom, but even Greece and Ireland have seen a significant rebound following the major crisis that required a bailout from the ESM and the IMF. The second surge in prices occurred in the Netherlands, which capitalised on Brexit. Germany and France, where growth has fallen to near zero, have also seen their construction markets stagnate. In Italy, despite wage losses, prices have fallen relatively slightly.

Does all this mean we should play down the housing crisis? Rather, we should examine it in detail, uncovering – as the popular saying goes – the devil in the propaganda. Paris, Berlin, Stockholm, Milan and Rome are undoubtedly affected by excess demand relative to a relative scarcity of supply. There is the impact of tourism (Rome, Florence, Venice, Madrid, Paris). There is the ‘magnet effect’ caused by the major economic transformation that is scaling back traditional industry and favouring services and high technology, which are concentrated in the major metropolitan areas (in Stockholm and Milan, prices are soaring just as they are in Amsterdam). There is also the exodus from rural areas or even small villages to seize the opportunities that only the big city offers. In Italy, the depopulation of inland areas, particularly in the Apennines, is now a striking phenomenon that has caused demand to plummet. Holiday homes are viable only in ‘iconic’ locations; however, they remain empty for ten months of the year, thereby helping to drive prices down.

Eurostat does not tell us that everything is fine; on the contrary, even the gap in the construction market reflects the divergences in growth and well-being between different countries. To understand what is happening and what is driving the protests and housing movements in European cities, however, we need to analyse the data carefully and look at the specifics. This suggests that governments should not resort to blanket subsidies or measures, but should assess each case individually and implement targeted interventions, tailored to the concrete needs of specific situations. In short, we must guard against the temptation of bonuses and ‘super-bonuses’. To answer the question posed at the start of the Eurostat study, we can say no: house prices do not exceed income everywhere and in every case. Indeed, in Italy, on average, the opposite is true. The housing crisis affects large metropolitan areas; it is significant, but it must be viewed through the right lens to avoid making the wrong decisions.