Buy a house in Milan, Rome or Naples: the main real estate trends 2018

In the real estate market in Italy, which began to show signs of recovery in the first part of 2018, the three main Italian cities of Milan, Rome and Naples stand out in terms of property sales. What are the biggest trends emerging in Italian real estate right now, according to Tecnocasa?

House prices in Milan, Rome and Naples

Overall, large cities have seen a slight increase in prices of 0.9%. The strongest growth was in Milan, which averaged +3.8% compared with the second half of 2017 and the first half of 2018. Naples also experienced an increase in sales prices, registering +1.3% in the period. However, this average for the 3 cities is brought down by Rome's performance, which instead sees a decrease not only in prices, but also in sales, which decreased by 1.3%.

Real estate sales growing in Milan and Naples

As far as the number of property transactions in these large cities is concerned, the half-yearly average speaks of growth of 2.2% (leaving out the fall in Rome). The amount of property sales in Milan has increased 2.8%, and even more so in Naples, where the number of homes sold has risen by 6.8%. All three cities show sales times, between when the house is advertised and when it’s sold, that is below the average of other large cities, which is 134 days (just over four months).

"The sales in Milan were already giving signs of recovery from the first quarter of 2013,” explains Fabiana Megliola, head of research at Tecnocasa. “In the Lombard capital, prices have been rising since the first half of 2017, after stabilising in the previous semester.”

In Naples, more houses are sold for tourism purposes

As for the reasons why people purchase houses in these cities, the need to buy a principal residence continues to prevail, being the main motivation for more than three-quarters of homebuyers in large cities. In Rome, up to 80% of people list this as the reason for the purchase of their house. In Naples, on the other hand, this figure stands at 63.3% because there in the south the purchase of property to rent out for investment purposes is gaining ground, rising to 34.2%. Only 19% of purchases in Rome are for this reason, while in Milan about a quarter of buyers purchase homes to invest in letting them out to tourists.

"In Naples, the highest percentage of purchases made for investment is linked to tourist rentals, a phenomenon that is affecting more neighbourhoods of the city in the light of increased numbers of holidaymakers," explains Megliola.

In Milan, rentals of two-bed apartments is most common

The three-bedroom apartment is the preferred housing typology of most buyers in Italy who purchase property in large cities (36.7%), and in Rome, at least, this holds true. In Milan and Naples, though, the preferred housing type is two-bed flats, making up 47.4% and 32.7% of purchases, respectively.

"In addition to being the city with the highest concentration of two-bedroom flats,” says Megliola, “Milan is also the metropolis where rental contracts signed by those who move for work (62.3%) are most common, which is understandable because it is an attractive place to work and because of the fact that many companies have chosen it to establish their headquarters. It is also the city where the amount of lease contracts with the parties freely deciding the amount of rent to be paid reaches a decidedly high percentage (91.3%), and the rental prices have begun to rise in Milan earlier than in other places (that is, from the second half of 2014).”

Finally, Rome and Naples are in line with the average of other large Italian cities in terms of the age of purchasers, with the most common age range being 35-44 years. Milan, on the other hand, is the youngest city: 35.2% of buyers are between 18 and 35 years old.

In Rome, long-term rental demand is strong

Generally speaking, if Milan and Naples stand out for a certain market dynamism, the same cannot be said of Rome. "The Italian capital does not show particularly significant trends,” says Megliola. “Among the three cities, it’s the one whose prices are still falling and which seems slightly behind in terms of a restart of values.

“Rents, however, have been increasing for the past three semesters, confirming that there is a good level of demand for rented properties in the capital, especially thanks to the presence of numerous universities. Moreover, unlike other cities, in Rome most demand is concentrated in a high spending range, between 250 and 349 thousand euro. Milan, on the other hand, averages between 170 and 249 thousand and Naples the lowest, with 120 thousand euro.”