Growing Rents and Declining Property Prices. In Italy, homeowners are currently inclined towards leasing their properties rather than selling them. This trend encompasses the entire residential sector, including the luxury segment.
Rent Trends in Italy: Continual Growth.
According to the latest findings from the research division of idealista, rental prices in Italy increased by 0.5% in July compared to the previous month. This increase is part of a consistent growth trend, with a significant rise in rents by 10.4% compared to the previous year. With this increase, “the average value of national rentals now stands at €13.5 per square meter”, explain idealista experts. However, it’s important to note the variations and discrepancies within our territory. The situation differs significantly when analyzing prices across regions, provinces, or major cities.
Regions
All regions, except for four (Veneto, Emilia-Romagna, Tuscany, and Marche), have experienced rent increases. The most expensive regions for rentals are Valle d’Aosta, Tuscany, and Lombardy, with values of €20.2, €18.1, and €17.4 per square meter respectively. On the other hand, the most affordable regions for future tenants are Umbria (€6.9/m²), Basilicata (€7.1/m²), and Molise (€7.3/m²).
Provinces
When analyzing data from the perspective of provinces, a factor related to the summer period becomes apparent: “Increases, some even in double digits, have been recorded in certain areas with a strong tourist vocation, especially smaller-sized regions, where the demand for vacation homes or short-term rentals can significantly impact rental prices,” explains idealista. For instance, the province of Foggia saw a 21.7% increase, while Bolzano and Massa Carrara experienced increases of 13.5% and 10% respectively. On the other hand, Vibo Valentia (-15.8%) marked the largest decrease, followed by Livorno (-7.9%), Ancona (-6.3%), Verona, and Vercelli (both -5.3%).
The List of Most Expensive Provinces
Contrary to expectations, Milan and Rome do not top the list. “In terms of prices, Lucca (€31.4/m²) is by far the most expensive Italian province for renters. It’s followed by Belluno (€29.1/m²), Grosseto (€25.5/m²), Rimini (€25.3/m²), and Ravenna (€24.7/m²),” comment the experts. They add that “17 other Italian provinces have monthly rates above the national average of €13.5, ranging from €20.7 in Milan to €13.7 in Urbino. At the bottom of the provincial value ranking, Caltanissetta is the most affordable at €5.1 per month, followed by Avellino (€5.6/m²) and Alessandria (5.7%).”
Major Cities.
The trend of rental prices in major cities has been more mixed, with a slight prevalence of increases: 41 increases, 39 decreases, and 10 cases where prices remained unchanged compared to June. Interesting situations were recorded in large markets: a 1.5% decrease in Bologna, a 0.7% reduction in Florence, and a 0.6% decline in Milan this month. Conversely, Rome, Naples, and Venice recorded respective increases of 0.3%, 1.9%, and 2.8%.
The List of Most Expensive Cities
Despite the decrease in July, Milan remains the most expensive capital with an average value of €22 per square meter per month, followed by Venice (€18.7/m²), Florence (€18.2/m²), and Bologna (€17.7/m²). Rome ranks 7th on the list with €14.5 per square meter, while Naples occupies the 10th spot with a value below the national average, at €12.8 per square meter.
Sell or Lease?
With declining property prices and rising rents, homeowners who are uncertain about whether to sell to monetize or lease their properties generally opt for the latter choice. This is also the prevailing trend in the luxury sector. According to Nativo data, over 30% of luxury property owners who approach them are considering both selling and renting, but nearly all opt for leasing after a thorough market and economic analysis. “In such an uncertain historical moment as the one we are experiencing, it is even more challenging to decide whether to sell or retain a prestigious property,” stated Nativo co-founders Sara Lini and Adriano Frigoli. “Those who choose to entrust their apartment to us often do so after considering personal matters.”
Fundamental Reasons for Choosing to Lease a House (Especially in Milan)
There are seven factors (identified by Nativo) that lead luxury homeowners to prefer the option of leasing, especially in the Milan market:
- A prestigious property is considered a solid hedge against inflation and an option that safeguards investment income in the long term.
- The lack of alternative and advantageous investment solutions for the liquidity obtained from selling a prestigious property.
- Leasing a two-room apartment in Milan with an eight-year open-ended contract generates an average annual gross yield of 5.5% for the owner. This yield is more profitable compared to government bonds, for example, which generate revenues of 3.75%.
- With demand surpassing supply, finding a prestigious property in Milan is challenging. Many properties are owned by families that do not need liquidity.
- Olympic Effect: Many anticipate that prices will continue to rise at least until 2026.
- The increasing demand for rentals from high-spending foreigners. Milan is attracting talent: many tenants who rent a property through Nativo come to Italy to benefit from the flat tax or arrive after living in London for an extended period due to Brexit.
- The flexibility of leasing provides the opportunity to keep options open for potential future property usage.
