To buy or to rent a home? It’s a question that’s always relevant for those searching for a new place to live, and even more so now, as mortgage rates are shifting due to the European Central Bank's rate cuts, making the buying option increasingly appealing in Italy. At least, this is the case in certain cities and for specific property sizes: the Research Office of the Tecnocasa Group has published a study comparing mortgage payments and rental costs for one- and two-bedroom flats in Italy’s main cities, to identify the conditions under which buying is financially more advantageous than renting.
The Tecnocasa study confirms that the current climate is particularly favourable for those looking to buy a home in Italy. In many cities, mortgage conditions and the pressures of the rental market suggest that, with capital to cover 20% of the property value and access to a mortgage, buying is a more advantageous choice than renting.
Buying or renting a one-bedroom or two-bedroom flat
Tecnocasa’s analysis is based on data from the first half of 2024 and considers the average price of mid-range, pre-owned flats in major Italian cities. The study simulated the purchase of one- and two-bedroom flats, with a 25-year mortgage at an average rate of 3.94% (as of August), financing up to 80% of the property value. Tecnocasa analysts compared the monthly mortgage payment with the average rental cost in each city and calculated the income required to access credit.
One-bedroom flats: buying is advantageous in many cities
In several Italian cities, the mortgage payment for purchasing a one-bedroom flat is now similar to or lower than the rental cost. This makes buying an economically beneficial choice, particularly in Bologna, Bari, Turin, Verona, Palermo, and Genoa.
In Milan, Rome, and Florence, the mortgage payment exceeds the rental cost, but the difference remains modest: €146 more in Milan, €65 in Rome, and €130 in Florence. Although Naples is not among the cities where buying is most advantageous, the difference between the mortgage payment and rental cost is only €39, making a mortgage a viable option for those interested in investing in property. In these cities, with a manageable monthly commitment, purchasing a property is a viable alternative to renting.
Two-bedroom flats: where buying is worthwhile
For two-bedroom flats, the findings are similar. The mortgage payment proves favourable compared to rent in Bari, Verona, Turin, Palermo, Genoa, Bologna, and Naples.
Even in more expensive cities like Milan, Rome, and Florence, the difference between the mortgage payment and rental cost is minimal: €18 more in Milan, €20 in Rome, and €152 in Florence. This suggests that, with the recent fall in rates, buying a two-bedroom flat remains accessible and advantageous even in these cities.
Rental market under pressure
Aside from the balance between mortgage payments and rent, the Tecnocasa study highlights a structural issue that encourages buying: the limited availability of rental properties. In many Italian cities, the supply of rental homes has drastically diminished, making it increasingly difficult for prospective tenants to find accommodation. This imbalance, combined with rising rental prices, is prompting many to consider buying as a sustainable and strategic alternative.
Prospects for 2025: slight rise in prices expected
Looking ahead to 2025, Tecnocasa expects a further increase in property prices and a slight reduction in transaction numbers, indicating that the real estate market is stabilising at new values. However, the recent rate drop still makes buying a feasible option for those planning a long-term investment, despite potential price increases.