Small town resilience: Housing market crisis and urban density in Italy

Abstract

Since the 1990s, city development has been promoted through densification processes by both local authorities and private investors in Europe and USA. This trend began in a boom phase of the real-estate market, sustained by high market demand and high prices. The aim of the present study is to see how the market has responded to six years of economic recession in Italy and whether urban form has a relationship with housing market performance. Is urban density still preferable in terms of the economic sustainability of investments? Or has the demand side of the market changed its behaviour? To elucidate this issue, we perform a multivariate regression and a cluster analysis on housing price variations from 2008 to 2014 with a dataset of economic and urban structure variables concerning the 114 most important Italian cities. The results suggest that housing market in less dense cities is more resilient and affordable than in denser cities during a recession phase. This phenomenon should be taking into account by local public authorities addressing and promoting urban development.