House prices are falling only in Milan. More properties are being bought in the surrounding areas. Rents are on the rise

The average discount applied stands at 7.5 per cent, broadly in line with the 7.6 per cent recorded a year ago. Given the age of the property, the fall is greater for second-hand homes (-7.6 per cent) than for refurbished homes (-6.8 per cent) and new-builds (-4.6 per cent), confirming the preference of potential buyers for properties in good condition.

In large cities, demand for property is mainly concentrated on three-room flats, which account for 41.5 per cent of enquiries. However, in Milan, the most sought-after property type is the two-room flat (44.7 per cent), the only exception amongst the major cities.

In large cities, disposable income is predominantly concentrated (66.6 per cent of cases) in the bracket below 250,000 euros, in line with January 2026. Milan and Rome show a higher concentration in the €250,000 to €349,000 spending bracket, at 26.1 per cent and 25.3 per cent respectively. In regional capitals that are not classified as major cities, 39.3 per cent of potential buyers state a budget of less than 119,000 euros. As regards the property supply, three-room flats are the most common type on the market, accounting for 34.3 per cent. These are followed by two-room flats, accounting for 23.3 per cent, and four-room flats, accounting for 22.7 per cent.

In the first half of 2026, rents rose by 1.7 per cent for studio flats, 0.6 per cent for two-room flats and 1 per cent for three-room flats. Compared with the previous six months, there has been a slowdown in growth, which had been particularly strong in recent years.

Milan, Bologna and Bari are the cities where rents have fallen, albeit to varying degrees. Palermo and Turin, on the other hand, have seen the most significant increases. Rents also continued to rise in provincial capitals: +1.6 per cent for studio flats, +2.3 per cent for two-room flats and +1.7 per cent for three-room flats. Here too, the increase was more modest than in the previous half-year.

Demand for rental properties remains high, whilst supply is struggling to keep pace with the needs of those looking for a home: people who do not have access to credit, who do not wish to buy, or who are relocating for work or study. In major cities, properties previously used for short-term lets are continuing to return to the market, partly due to the increased administrative complexity involved, returns that are not always attractive, and local regulations aimed at curbing the practice. The market continues to favour only properties in excellent condition. Furthermore, landlords remain concerned about the possibility of rent arrears, a factor that makes them increasingly cautious about letting and which, in some cases, leads them to leave the property vacant. Milan has the highest rental rates: €823 for a studio flat, €1,093 per month for a two-room flat and €1,502 per month for a three-room flat. The average time taken to let a property in major cities stands at 35 days. There has been an increase in tenancies signed for study purposes and those with agreed rents.

“In Italia,” explains Piero Terranova, an analyst at the Tecnocasa Group Research Department, “the majority of property transactions continue to involve main residences, which accounted for 74.8 per cent of purchases in the first half of 2026. Investment stands at 18 per cent, broadly in line with 2025, whilst holiday homes account for 7.2 per cent, a slight increase from the 6.6 per cent recorded the previous year. Nationwide, households account for 66 per cent of buyers and single people for 34 per cent; in Milan, however, the proportion of single buyers exceeds 48 per cent. Interest in energy efficiency continues to grow: in Italia, the proportion of sales in energy efficiency classes A and B rose from 8.4% in 2025 to 9.2% in the first half of 2026. In Milan, the increase is even more pronounced, rising from 7.7 per cent to 9.5 per cent. Figures are also close to 9 per cent in Bologna and Verona. The trend for residents of large cities to purchase their main home outside their municipality of residence continues. In 2019, 75 per cent bought in their own city, whilst in the first half of 2026 this figure fell to 60 per cent. In Milan, the trend is even more pronounced: only 38 per cent of residents buy within the city itself, whilst 62 per cent look outside the city. In 2019, the proportion of purchases made outside Milan stood at 35 per cent. In Italia – Terranova concludes – 70 per cent of tenancies are linked to a choice of accommodation, 24 per cent relate to work requirements and 6 per cent to study. In Milan, 38 per cent of tenancies involve workers on secondment and 13 per cent involve students. Nationally, the open-market tenancy is the most common type of contract, accounting for 41 per cent of choices, followed by the agreed-rent tenancy at 31 per cent and the transitional tenancy at 28 per cent. In Milan, however, the distribution of the types of tenancy agreements used has changed significantly: the agreed-rent tenancy has risen from 10 per cent in 2025 to 31 per cent in the first half of 2026, whilst the transitional and open-market tenancies have declined. In Milan, the sharp increase in the use of agreed-rent contracts is driven by the new Territorial Agreement of 2023, which adjusted the rent caps.”

Forecasts

“Over the coming months,” explains Fabiana Megliola, head of the Research Department at Tecnocasa, “no significant changes are expected in the property market; sales and prices are likely to see modest increases: the former are likely to fluctuate between 760,000 and 770,000, whilst the latter are expected to rise by between 3 per cent and 5 per cent. The rise in interest rates could make it more difficult to access credit and drive up demand for rental properties. Rents will rise only where there are still sufficient margins to ensure their sustainability; for this reason, we expect a modest increase of between +1 per cent and +3 per cent, partly due to greater supply on the market. Italians’ relationship with home ownership still appears strong; the home remains a means of investing savings that has not yet been affected by highly uncertain circumstances such as those we are currently experiencing.”