Rental prices continue to rise for Milan and Rome
With signs of rent increases beginning to slow in Europe at the end of 2023, the biggest challenge will be related to housing availability. The 2024 trends of the HousingAnywhere platform
The effects of the European Central Bank’s (ECB) interest rate hike cycle and rapidly rising inflation were always felt in the EU Real estate market. With high prices and rising mortgage rates, those who wanted to buy a home had to reconsider their plans several times. In this context, rents are back in trend and increasing demand has led to rising prices.
But how could the scenario change if the ECB starts cutting interest rates and consumer prices fall compared to their 2022 highs? There were some small but significant signs in the last quarter of 2023. That means a gradual slowdown in rent increases, the Internationale reported HousingAnywhere Rent Index, which analyzes rental price developments in the 23 largest cities on the Old Continent. Although rental prices in Europe were actually 5.8% higher in the final months of 2023 than a year ago, this is the lowest annual increase in two years. In addition, some of the most sought-after and expensive cities on the Old Continent, such as Amsterdam, saw prices decline at the end of 2023. However, rents are expected to continue rising in some cities.
Still record prices in Rome and Milan.
There are two Italian cities in turmoil. Analysis by HousingAnywhere, a European medium-term rental platform aimed at young professionals and students, actually shows that Milan And Rome “The difference in the price trends of these two cities compared to other European metropolises is that Rome and Milan are among the most expensive in Europe (second and third in the list of cities with the highest prices for housing). Rent increases on a quarterly basis (+1.8% for Rome and +2.8% for Milan) and although these increases are rather modest, they are well above the European average change in quarterly prices in the fourth quarter of 2023, in which there was even an increase An increase was followed by “a general decline (-2.5%),” he explains to WSI Luca Contella, Regional Manager Southern Europe at HousingAnywhere. Although it is difficult to pinpoint a single reason for the price trend, as housing is heavily linked to other sectors, there is another factor that may have affected the costs of the two Italian cities.
“Both Rome and Milan are characterized by a high number of short-term tourist rentals, which can be converted into medium-term residential rentals during the tourist off-season (usually winter) at the request of homeowners – States.” Contella – . As a result, we are seeing a greater presence of originally short-term rentals on the HousingAnywhere platform in the fourth quarter of the year, leading to an increase in prices.”
A look ahead to 2024.
But what are the most important trends for 2024? According to Contella, we must start from a consideration that the most popular cities have in common: that is, they still have an important challenge to face housing shortage, with rental prices that are still anything but affordable.
“It is still too early to say whether we can expect a decline in rental prices in 2024,” explains Contella. Only by addressing the supply shortage problem and ensuring that new developments in the housing market keep pace with demand growth can we make housing affordable in the long term.”
The full article was published in the February 2024 issue of Wall Street Italia magazine. Click here to login.
