REPORT 4Q-2025 | Economic and RE data

General Situation

Following the restrictive cycle of 2022–2024 triggered by the inflation crisis, the fourth quarter of 2025 continued the trend observed throughout the year, signaling a phase of macroeconomic normalization.

Inflation is now close to central banks’ targets, allowing the continuation of interest rate cuts. Growth, however, remains moderate in Europe and Italy, while it is more robust in the United States, albeit with signs of cyclical slowdown in the labor market.

The international geopolitical context remains marked by tensions in the Middle East and Ukraine. The energy-related impacts of these conflicts appear to have eased compared to a few years ago, while uncertainty about US trade policy remains higher. Overall, the picture suggests moderate, albeit fragile, growth.

Following the rate cuts implemented in the first half of the year, the ECB did not introduce further easing, leaving the refinancing rate at 2.15% (-1% overall in 2025). The Bank of England implemented a single 25 bps cut in December, bringing the rate to 3.75% and completing a cycle of four cuts of the same magnitude during 2025. Meanwhile, the Federal Reserve, with two 25 bps cuts during 4Q-2025, achieved a total reduction of 0.75% over the year, also bringing its benchmark rate to 3.75%.

Financial markets have maintained their strong position, reaching continuous all-time highs throughout the year. The S&P 500 index closed the year with gains exceeding 16%, while the FTSE MIB index recorded an increase of over 31% during 2025.

In short, what many had feared would occur in financial markets did not materialize—quite the opposite.

Some figures

In Italy, inflation stood just above 1.5%. At the European level, the harmonized index recorded inflation at 2.1%. In the United States, inflation continued to slow, settling at 2.7%. The situation in the United Kingdom is more complex, as inflation has reversed course from 12 months earlier and remains well above 3%.

Exports growth, the resilience of the transport sector, and investments linked to the National Recovery and Resilience Plan (PNRR) supported Italian GDP (+0.7% in 2025), despite industrial production still showing a slight decline. It should be noted that Italian growth, while in line with France and higher than Germany, remains among the lowest among advanced economies. The unemployment rate remains under control at around 6% (fourth-quarter data not yet available).

Europe as a whole is growing moderately (+1.3%). Germany, after two years of stagnation/recession, is showing early signs of recovery (+0.3%). The United Kingdom is growing at a pace in line with the European average, but still more slowly than the most dynamic global economies, including the United States, which—despite being in a slowdown phase—is growing at a rate of 1.8%, about 1% lower than in 2024.

Real Estate Market

The Italian real estate market remains solid. Political and economic stability may be key factors behind this performance. Political stability—regardless of political alignment—has always supported investment and risk appetite, while economic stability is reflected in a more predictable interest rate environment.

The number of residential transactions recorded in the third quarter of 2025 increased significantly compared to the same quarters of 2023 and 2024, suggesting that the inflation crisis may now be fully behind us.

Extending the analysis to the year-to-date performance through the end of the third quarter, compared with the same period in 2024, transactions increased by +9.2% nationwide and by +9.5% in both Lombardy and the metropolitan area of Milan.

Looking ahead, 2025 could record figures close to those of 2022, the year in which the gradual rise in interest rates began before accelerating sharply in the following year.

At the national level, 47% of residential real estate transactions involving private individuals were financed through a mortgage (+3% compared to 12 months earlier). In Lombardy, this share rises to 54.7% (+2.9% year on year), while in the Milan metropolitan area, nearly 3 out of 5 transactions require bank financing (59.3% compared to 56% in 3Q-2024). The figure is also increasing on a quarter-on-quarter basis.

Up to the third quarter of the past year, 5.81% of the properties transacted were newly built (source: Osservatorio Immobiliare AdE).

The commercial real estate market also recorded a particularly positive quarter. After the first and second quarters of 2025 had already proven to be the most active in terms of commercial property transactions among comparable periods since 2011, the third quarter confirmed the trend, pointing toward the most active year since 2011.

In the analysis of the first nine months of the year, it is noteworthy that commercial transactions in Milan and its province decreased by 2.8% compared to the first three quarters of 2024—an outcome that warrants further analysis once full-year data become available.

The decline in commercial real estate transactions in the Milan metropolitan area affected all key asset classes: offices (-4.7% yoy), retail (-2.4%), and industrial/logistics (-1.9%).

Building permits issued for new residential developments up to the third quarter of 2025 decreased by 8.5% compared to the same period of the previous year. Non-residential permitted surface areas also declined, albeit to a much lesser extent (-0.7%) (source: ISTAT).

Data Sources: Agenzia delle Entrate, ISTAT, and tradingeconomics.com.

Data Processing: Darian RE

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