Milan is the most expensive city to rent a house, with 22.1 euros/m2, followed by Florence (18.8 euros/m2) and Bologna (18 euros/m2).
Florence is also the second city in Europe, after Lisbon, for the growth of studio apartment prices, which reached a surprising figure of €1,100 compared to €825 requested in the second quarter of 2022 (+33%).
The rental race in Italy continues. According to the latest report published by idealista, in the second quarter of 2023, rental prices increased by 10.1%, with the average price reaching 13.4 euros per square meter, setting a new rental record in Italy.
“Considering the annual variation, prices have increased by 11.6% in the last 12 months,” commented Vincenzo De Tommaso, head of the research department at idealista, who then explained that “in the recent period, with the increase in mortgage rates, renting has become the only viable option for families who have lost purchasing power to access a property in a context of high inflation. This has exacerbated the tension in a market that already had insufficient supply to meet the rental demand of Italians, leading to a surge in prices during the spring months.”
Looking ahead to the coming months, he added, “In this scenario, it is unlikely that the upward pressure on rents will decrease anytime soon.”
However, it’s essential to note that different cities have experienced very distinct trends, revealing some surprises, especially when comparing data from various industry operators.
The Most Expensive Cities for Rentals in Italy
According to idealista, Milan is the most expensive city to rent a house, with 22.1 euros/m2, followed by Florence (18.8 euros/m2) and Bologna (18 euros/m2). Venice ranks fourth (17.6 euros/m2), Rome fifth (14.5 euros/m2), and Naples eighth (12.5 euros/m2). At the bottom of the ranking, we find Caltanissetta (4.8 euros/m2), Reggio Calabria (5 euros/m2), and Agrigento (5.5 euros/m2).
But Which Cities Have Seen the Most Significant Increase in Rental Prices?
The answer comes from HousingAnywhere, Europe’s largest platform for rentals for young professionals and students, which, within its International Rent Index, highlighted that in 2023, Florence and Turin are experiencing the most significant percentage growth compared to the rest of the country (both in the short and long term): both cities have recorded an increase in rental apartment prices of 21% and 12.5%, respectively, compared to the same period in 2022. Specifically, in Florence, a two-room apartment now costs €1,700 per month, compared to €1,400 last year, while in Turin, it’s €900, up from €800 last year. Additionally, Florence is the second city in Europe, after Lisbon, for the growth of studio apartment prices, which have reached the surprising figure of €1,100 compared to €825 requested in the second quarter of 2022 (+33%).
Milan and Rome: What’s happening?
What about Milan and Rome? According to HousingAnywhere, the two largest Italian metropolises have experienced decreasing or stable prices in the March-June 2023 period, depending on the type of property. In Milan, during the period from April to June 2023, two-room apartments decreased to €1,750, studio apartments remained stable at €1,200, while there was a slight decrease of 5% for private rooms (€670 compared to €710 at the beginning of 2023). In Rome, on the other hand, prices in the last quarter decreased for almost all types of properties: -23% for studio apartments, -8% for two-room apartments, now at €1,650 (even lower than the €1,750 in 2022), and stable at €520 for private rooms.
Source: HousingAnywhere
However, this slowdown is also confirmed by idealista, which mentioned that major markets are still growing but with a more contained trend compared to the overall growth, as evidenced by the variations in Rome (2.9%), Naples (2.5%), and Milan (1.5%).
What to do in the real estate world?
“Finding alternative ways to expand the supply of residential rental housing, particularly projects that allow for more flexible use of space, should be the top priority right now to relieve pressure on the real estate markets: accessibility can only be achieved in a balanced real estate market, where demand and supply are equivalent,” commented Djordy Seelmann, CEO of HousingAnywhere.
The real estate market trend in Italy in 2022
2022 was the year when rental prices in major cities recorded the most significant increase. Why? “Demand is growing, driven by students, people working away from home, and families facing difficulties accessing credit. The supply is decreasing due to the effect of short-term rentals and because fearful owners prefer to keep the property vacant,” explained by Tecnocasa. They also made an assessment of the past year, confirming that Milan had the highest rental increases.
“Looking only at the three analyzed cities, Milan has the shortest rental times: 35 days. The two-room apartment is the most rented type of property in major cities (40%), particularly in Milan, where it reaches 49.9%. In Rome, it’s 43.5%, and in Naples, it’s 37%,” explained Tecnocasa. In the Lombard capital, the most common type of contract is the open-ended contract (67.0%), followed by Naples, even though with lower percentages (41.7%). In Rome, the agreed rent contract prevails (64.8%). Rental for housing is predominant in Naples (77%) and Rome (56.2%), while in Milan, student housing prevails (34.8%).”
The analysis of rentals in the three most important Italian metropolises yields results that are sometimes similar and sometimes more distant, explained Fabiana Megliola, head of the research department at Tecnocasa group. Milan stands out for sure, as its rental rates have increased the most compared to the three considered metropolises and even compared to other major cities. Among the three cities examined, Milan is the only one where free rent prevails: the rental values agreed upon in the contract are much lower in Milan compared to those that can be negotiated with a free rent contract (4+4). This difference even nullifies the tax benefits that this formula entails. This is due to a strong rental demand in the city and a low supply, allowing for average rents of around €1040 per month for a two-room apartment, the highest in Italy.
As for rental duration, Milan is the only one that falls below the average of the major cities, while Naples and Rome are slightly above the average by a few days. Naples, with 43 days, has the longest rental duration among the three. It is also interesting to note that the reasons for renting the property are focused on housing, both in the major cities and in Rome and Naples, with the latter reaching as high as 77%. In Milan, on the other hand, there is a fairly even distribution of reasons that we analyzed, including housing and study, as well as a significant portion (33.9%) related to work relocation. The most rented property type is common in all the cities examined, which is the two-room apartment, and in Milan, it prevails significantly.
