Deutsche Bank reports that wage growth has stalled in Rome and Milan while housing costs keep rising, eroding purchasing power

Deutsche Bank’s July 2026 report found that wages in Rome and Milan have stalled while housing costs continue to climb, reducing residents’ purchasing power despite relatively low prices for everyday goods. The trend threatens consumer spending, talent retention, and could prompt policy responses on affordable housing and wage growth. Who is involved: Deutsche Bank (analysts), residents and employers in Rome and Milan, Italian policymakers, and potentially Italian banks exposed to residential mortgages.. Likely next: The report does not outline specific upcoming actions; stakeholders await further data on wages and housing costs.. Deutsche Bank’s July 2026 analysis points to a widening affordability gap in Italy’s two largest metropolitan areas. While wages in Rome and Milan have shown little upward movement, residential property prices continue to climb, squeezing household budgets even though everyday consumer goods remain comparatively cheap. This divergence reduces disposable income and could dampen retail demand, especially for non‑essential items, as consumers allocate a larger share of earnings to housing costs. For lenders with sizable Italian mortgage books, the trend raises concerns about the future performance of residential loans. Higher housing cost burdens may increase the risk of delinquencies if borrowers cannot keep up with payments, prompting banks to tighten underwriting standards or increase provisions. At the same time, the situation is likely to fuel policy discussions on measures such as affordable housing subsidies, rent controls, or targeted wage support initiatives, which could shape the near‑term outlook for both the real‑estate market and consumer spending in Italy.

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