Buying or renting a property, both have their advantages and pitfalls according to an analysis of the possibilities in Milan, Rome and Naples.
Is it better to buy a house or rent? Both have their advantages and pitfalls and this eternal question is now even more relevant in Italy due to the coronavirus health pandemic, a changing real estate market and new trends in the market. The experts at Tecnocasa are going to give us some answers, looking specifically at the case of Milan, Rome and Naples.
At the moment, interest rates are still particularly convenient, house prices are low (although in some cities they have started to rise) and rental prices are also on the rise. The analysis of the convenience of buying a property, rather than choosing to rent, takes these variables into account:
- a medium to well-used apartment typology
- properties located in three areas: the centre, semi-centre and outskirts of Milan, Rome and Naples
- the purchase of both two-room and three-room apartments
- a 25-year mortgage, at a rate of 1.35%, with financing of both 70% and 80% of the value of the property, with sufficient liquidity to cover at least 20% of the value and additional expenses when the loan is taken out
- comparison of mortgage instalments with rental payments
- the level of income needed to access credit
Let's have a look at the results of the analysis in each of the cities:
In the most central area of Porta Romana-Crocetta, for a two-roomed apartment worth 393,500 euros and a three-roomed apartment worth just over 520,000 euros, mortgage installments are always lower than rent, both with 80% and 70% financing. For this reason, purchasing a property is the best choice.
In the semi-central area of Solari-Foppa, both in the case of buying of a two-roomed apartment and a three-roomed apartment with 80% and 70% financing, the installment of the loan is lower than the rent, with rent set around 1,600 euros for a three-roomed apartment and 1,200 for a two-roomed apartment.
In the outskirts in the Barona-Santa Rita area, not only does buying a property always come out on top of renting (with rental prices from 950 to 1,200 euros), but the gap between rental prices and mortage installments gives a clear advantage to the latter.
In the centre of the city in Ghetto di Roma (the Roman Ghetto) for example, a rental lease is the most convenient option. For a two-roomed apartment, worth 529,000 euros, you would pay monthly rental of around 1,200 euros per month against a mortgage installment of 1,660 euros. Even in the case of a three-roomed apartment valued at 703,000 euros, it is always worth renting: rent would range from 1400 euros and mortgage installments from 2210 in the case of 80% financing.
In the semi-central area of Prati-Cola di Rienzo and the suburbs, Centocelle-Faggi, buying property comes out on top, and in particular those with three rooms, as mortgage installments work out at almost half the average rent.
In Naples, purchasing is always the best option. The only case where this could be argued is in the case of the three-room apartment financed at 80% in the Fuorigrotta district, where mortgage installments and rent are on a par with each other (717 euros for mortgage installments and 700 euros rent per month).