Is Milan safe from the property bubble?

Ever since the term appeared in the collective consciousness, with the great crisis of 2008, the real estate bubble has always been a kind of looming phantom for investors and homeowners worldwide. And the real estate bubble is often talked about in Milan, with its now skyrocketing prices that, according to some, should now collapse, now inflate further, now remain stable. But according to what was recently written in Forbes, when it comes to Milan, we can rest easy. What's more: in a global economic context in which some metropolises are facing the risk of a real estate bubble, Milan seems to represent an example of stability, even if, according to the study's ranking, the Lombard capital is the most at risk of the least at risk while São Paulo and Warsaw are the 'safest' of all. According to a study by the Swiss bank Ubs, in fact, not only has the risk of a global real estate bubble been significantly reduced, but Milan is among the lowest risk cities.

What do the experts say?

The study mentioned by Forbes started from several factors such as the ratio of the average house price to the average income of the population, the ratio of the house price to the average rent, the ratio of the total amount of mortgages to the GDP of the city, the ratio of the average house price in the city to the house price in the rest of the country. The higher these ratios are, the greater the risk that houses are overvalued compared to their real value. Here is what the study says: 

«Milan’s housing market has recorded rising prices since 2018. Falling mortgage rates, a robust economy, new developments, and a favorable tax regime supported housing demand. Though nominal prices continued to rise between mid-2022 and mid-2023, they could not keep up with inflation. Real prices dropped by 2%, in line with local real rental and income growth. We think the market remains fairly valued, virtually unchanged from last year. Solid prospects for the local economy, an extension of the underground railway, and the upcoming 2026 Olympic Winter Games all contribute to sustaining valuations in nominal terms».

Despite the increase in average prices per square metre, which have risen by 3.3% since 2022 and now stand at around €5217, making it the most expensive in Italy from this point of view, the Milan market is just about unchanged, making it relatively stable in a more general context in which Zurich, Tokyo and Miami are all at risk. Now, according to the study, the increase in GDP, the development of the transport network and the awarding of the 2026 Winter Olympics have contributed to maintaining a climate of confidence in the city's economic prospects on the part of the financial world, but it is also important to take into account the general perception of the citizens themselves, who certainly feel the daily problems that make the idea of living in the city less rosy, such as the issue of public safety and hygiene, as well as petty crime, as well as that of petty crime and the price of living, which risk undermining the level of trust enjoyed by city and government institutions.