The decline on an annual basis accelerated from a 2.1 percent fall year-on-year in the second quarter and a 0.2 percent decline in the first quarter, ISTAT said.

Outgoing Prime Minister Mario Monti extended the "IMU" housing tax to principal residences, which were previously exempt, a move which some critics say has contributed to a slump in Italy's housing market.

The move was one of the most unpopular of the emergency measures passed after his government took power in November 2011, at the height of the financial crisis.

It has become a campaign theme ahead of February elections.

Former premier Silvio Berlusconi has promised to exempt all primary residences while centre-left leader Pier Luigi Bersani has said it should be scrapped for owners of less expensive properties.