In the “problems we’d all like to have” category, flamboyant Italian socialite Marta Marzotto recently complained publicly about the diminishing quality of life in Cortina, Italy, as basic services disappear from the mountain resort.

It’s hard to feel sorry for her and other owners of property in the Dolomites valley. Although official figures, reflecting old reporting practices, still put the price of Cortina houses at €6,000-€8,000 per sq metre, it is now generally acknowledged that the real cost is about €18,000-€20,000, making it the second most highly valued market in Italy behind Capri. Prices are more than double the average of €5,000- €9,800 per sq metre for Milan and Rome and well above the unprecedented €12,000-€18,000 level that has had sellers salivating in St Moritz, the nearby Swiss resort.

About two hours north of Venice and its international airport by car, Cortina d’Ampezzo – its official name – is Italy’s most glamorous ski destination. British mountain enthusiasts “discovered” the “pearl of the Dolomites” at the turn of the 20th century, when it was still Austrian, and its international prestige reached its apogee when it hosted the 1956 Winter Olympics and the first Pink Panther film in 1963.

Its international reputation has faded since then. (Sting was recently disappointed and left early.) But Italians, including the Bennetons and sofa king Pasquale Natuzzi, don’t care. When they make money, they buy a Cortina house.

The resort’s residential stock is largely condominium apartments in low-rise, Alpine-style buildings with shutters and obligatory geraniums. Most were built during a 1960s development spurt that ended with 1970s zoning regulations. Buildings generally contain from six to 12 apartments (referred to here as “houses” or casas in Italian), ranging from 80 to 200 sq metres. Ownership includes a percentage of common areas such as garage or garden. A rare stand-alone house (villa) commands a premium.

Newly refurbished houses can be lavish; taste runs to heavily carved and panelled Alpine baroque. But with properties changing hands slowly, many have decoration and fixtures from Capucine and David Niven’s days. Remodelling, by excellent and reliable local artisans, costs from €2,000 to €2,400 per sq metre, according to Cortina surveyor and contractor Marco De Biasi.

Several things drive the unwavering ascent of Cortina property value. There is the glamour factor, more attractive to status-conscious investors than the panorama. The virtual ban on new construction keeps stock scarce. And in spite of the increasing prices, it is not a speculative market. People only sell if they must, usually during generational shifts.

With the euro’s arrival, the official rate of L1,920 to one became de facto L1,000 to one, and the prices of everything in Italy doubled; in Cortina, an extra €3,000-€4,000 per sq metre came along for good measure. Then an amnesty on repatriating funds to Italy in 2001 sent returning money flooding into high-end real estate. De Biasi says that a desirable house purchased in 2001 for about €1.2m – 120 sq metre (three bedrooms) on the sunny side of the valley, with a view and within walking distance of the town’s traffic-clogged centre – would achieve double that today.

In spite of status-conscious Italians’ perception that anywhere else in the Dolomites is vorrei ma non posso (loosely translatable as “wannabe”), Cortina is not exactly unique and contiguous valleys – Val Badia, Val Pusteria and the lower part of Cortina’s Boite valley – have charms that can compete. In Val Badia, picture-book San Cassiano and La Villa offer a bigger network of ski trails than Cortina’s. Dobbiaco, about 40km away in Val Pusteria, feels just like the corner of Austria it was when Gustav Mahler composed his 9th symphony while summering there.

But Mair Roland of estate agency Kugler Immobiliare, a Bolzano-based firm working in Dobbiaco as well as in charming Brunico and San Candido, reports that Val Pusteria prices start at only €4,500-€5,000 per sq metre. And, excluding the euro-conversion jump, they have increased only 5 to 7 per cent during the same period in which Cortina’s have more than doubled. Kugler has a new, three-room attic apartment with access to ski slopes for €465,000. A similarly sized attic apartment in a (rare) new Cortina building would probably go for about €1.5m.

Why the huge difference? In his ­German-accented Italian, Roland admits that Val Pusteria is less “high society” than Cortina. But that is not all.

While Cortina belongs to the Veneto region of Italy, the Pusteria and Badia valleys are in Trentino-Alto Adige. Not a mere geographic detail, this reflects historic and cultural differences that influence local policies and ultimately property prices. Until 1919, both regions belonged to Austria but they were split after Italian accession. Subsequent tension over Trentino’s autonomy, the memory of fascism’s brutal suppression of the German-speaking majority and separatist violence (until the 1960s) isolated the region from Italy.

Local officials’ approach to developing the socially and environmentally sensitive setting was also different from the Veneto’s. In fact, Trentino-Alto Adige permits new building. But it sets 60 per cent aside for local residents. Eighty per cent of houses on the market now are new, with the rest divided between remodelling and residence changes. The result of these carefully monitored policies is that towns in Val Pusteria and Val Badia thrive year-round while Cortina struggles.

Many now describe Cortina as “a bank”, a lifeless but safe spot to park cash. The economy is seasonal, with local merchants having to cram a year’s business into a month or two. Many owners use their Cortina houses only a few weeks per year and rarely rent them out at other times, according to Elisabetta Zardini, whose agency also manages property. Empty houses do not sustain businesses and services or fight for better hospitals or schools.

High prices have also driven away Cortinesi who supported local businesses. Those expecting to be set for life after selling ancestral homes had to move to cheaper quarters farther down the valley. During high season, congested traffic on the only road keeps them from reaching their Cortina jobs. New families and young people can’t afford to remain. Because staff can’t afford to live in town, hotels struggle to find help and several have closed.

While residents of Val Pusteria and Val Badia might have looked at Cortina’s enrichment with envy, that is changing. As part of its autonomy agreement, Trentino Alto-Adige enjoys subsidies from the Italian government but sends less of its own revenue to Rome. This gives it enviable sports and health facilities that the Veneto, with Venice and its industrial areas to look after, cannot provide. Whether through history’s tricks or shrewder management, Cortina’s neighbours have maintained more of their mountain heritage. Recently, however, the ritzier resort has started to come around, joining with five other former rival towns in a bid to protect their common culture and language.

As Cortinesi Elisabetta Zardini responds when her son asks why they haven’t cashed in and left yet: “Could you sell part of yourself?”