Rents and rents are rising in the big cities. In Milan, prices have risen by 43% in 10 years

The year 2024 is expected to close with a slight drop in purchases and sales, around 690 thousand exchanges, on a growth in residential prices of between +1 and +3 per cent, and above all with an increase in rents of between 5 and 7 per cent. Milan confirmed its position as the most expensive city in Italy, with the average price of new property at around 5 thousand euro per square metre, but it can easily reach 17 thousand euro and even more for stately homes in central areas. In the last ten years, the revaluation of the new has been + 43.8 per cent. But until when will this run be sustainable? Tecnocasa analysts are also asking themselves this question. At a press conference yesterday in Milan, they presented the picture of the first half of the year on the residential market and the outlook for the end of the year. The rate cuts are an injection of confidence for potential buyers who, given also the high levels reached by rents, could push towards purchasing. The challenge that also represents an opportunity for the real estate market is to pursue sustainability without neglecting social rebalancing, in an increasingly uncertain and fast-changing environment.

According to Tecnocasa, rents have continued to rise in the first half of the year: from around 4% for one- and two-room apartments to 3% for three-room apartments. Rental demand is holding up and continues to face an important shortage of supply. Rents are rising in all large cities. Above all in Bari (respectively +5, +7.4 and +2.1% for one-, two- and three-room apartments) but also in Bologna (+5.2, +5.8 and +2.9%) and Rome (+4.3, +4.1 and +4.9 per cent) . Less so in Milan, which nevertheless remains the most expensive in absolute terms (+2.1, +2.4 and +1.1 per cent). "The dynamics are different," says Fabiana Megliola, head of the Tecnocasa Group Studies Office. "In Rome's capital city, the wait for the Jubilee is exacerbating the phenomenon of not renewing expiring contracts to convert them into short-term rentals. Rental growth is slowing down in Milan, a city where it is more expensive to rent a house. Here, the market, saturated with short leases, is seeing a flow of owners moving from short term to temporary or agreed rental contracts'.

Again out of the 10 sample cities, the gross annual yield averaged 5.6 per cent. They ranged from 7 per cent in Genoa and 6.9 per cent in Palermo - mainly due to the fact that the values per square metre of the properties - mostly old - are rather low, to 4.7 per cent in Milan and 4.3 per cent in Florence (Rome and Bologna, in the middle, around 5.2 per cent).

The large cities closed with a price increase of 0.9%, with the exception of Palermo with -0.4%, the best result was in Florence with +3.2%. Milan recorded +1.3%, the capital closed with +0.6%. The hinterland of large cities and provincial capitals closed with +1 per cent. The municipalities in the provinces of Bari and Palermo (where the seaside resorts are pushing) did well. Price growth in Milan's hinterland is slowing down, although it continues to attract buyers resident in the city. Among the capitals whose prices have risen more than average are Syracuse, La Spezia (where seaside towns with a better quality-price ratio compared to neighbouring provinces have also been rewarded) and Ferrara (which is attracting those investors who find Bologna too expensive and who find tourists and students in the former feud of the Este family to make an income). Also affected by this is the average discount on purchases, around -8 per cent, which widens the lower the quality of the buildings and translates into -6 per cent in Milan and even goes over 10 per cent in Palermo and Genoa. Spending in the large cities is concentrated in the lowest bracket, up to Euro 119 thousand (for 25.1% of cases). Milan and Rome, also in view of their higher prices, record a higher percentage between 250 and 349 thousand euro, both in 24.9% of cases.

"In Milan, interest in the new is growing," Megliola concludes. "In the first half of 2024, new construction sales accounted for 4.3 per cent of total sales in the city; in the same period last year they were 2.1 per cent. And in the same period in the city, sales of class A properties rose from 2.4 per cent in the first half of 2023 to 4.7 per cent in the same period of 2024. Milan remains the most expensive city in Italy and the average price of new property is around € 5,000 per square metre, but it can easily reach € 17,000 and even more for luxury properties in central areas. In the last ten years the revaluation of new property has been + 43.8 per cent.