The Italian leasing market: rate growth is decelerating, yet supply deficit persists

Throughout the latter part of 2025, the segment of long-term leasing for residential properties in Italy remains highly active, although the pace of rental rate growth is gradually easing after several years of rapid expansion. As per a report from the Tecnocasa Group research center, in comparison to the preceding six months, average rental prices in the major Italian cities saw a 2.2% increase for studios, 2.3% for two-bedroom apartments, and 2.2% for three-bedroom apartments. This indicates ongoing market growth, albeit at a less vigorous rate than before.

Demand stays robust, while supply remains restricted

A sustained high demand arises from diverse tenant groups. Primarily, this includes individuals unable to buy homes due to mortgage challenges. Moreover, there is a rising number of people opting to lease instead of purchasing. A substantial portion of the demand also comes from individuals relocating to other cities for work or education.

The trend of a growing number of international students selecting Italian universities is increasingly visible. More young people from overseas are entering the rental market, intensifying the demand for housing in the major educational hubs of the country.

Nonetheless, supply struggles to keep up with the escalating market demand. One primary reason is the reluctance of homeowners, many of whom prefer not to lease their properties out for fear of tenant nonpayment, leaving a significant portion of the housing stock unoccupied.

The short-term leasing sector is exacerbating the situation. While the influence of tourism has lessened in major cities, short-term rentals are rapidly expanding in popular tourist destinations, diminishing the available housing for long-term lessees.

Regions with the sharpest rental increases

The growth in rental rates varies notably across cities.

The most pronounced surge was observed in Palermo. There, rental prices rose by 8.7% for studios, 4.9% for two-bedroom apartments, and 4.8% for three-bedroom apartments.

Genoa also shows high growth rates, with increases of 6.6%, 4.8%, and 3.9% for the respective categories.

Turin is experiencing positive market dynamics as well, with studio rentals up by 1.9%, two-bedroom apartments by 4.3%, and three-bedroom apartments by 3.5%.

On the contrary, Milan and Bologna present a different scenario. Stagnation or slight declines in rates were observed in these cities during the latter part of 2025.

In Bologna, rental prices decreased in all housing categories:

• studios - by 1.5%;
• two-bedroom apartments - by 0.6%;
• three-bedroom apartments - by 1.1%.

Meanwhile, in Milan, studio rents remained nearly unchanged, two-bedroom apartments decreased by 0.7%, and three-bedroom apartments only saw a 0.2% rise.

Analysts point out that the deceleration is not due to weakening demand but rather the exceedingly high price levels. Currently, the average rent in Milan is around 840 euros per month for a studio, 1,130 euros for a two-bedroom apartment, and 1,525 euros for a three-bedroom apartment. According to Tecnocasa, these values are nearing the financial limit for most lessees.

Rome, Florence, and Naples continue modest growth

In Rome, rental rates are steadily increasing:

• studios - by 2%;
• two-bedroom apartments - by 1.9%;
• three-bedroom apartments - by 2.2%.

The average rental prices here are 725, 950, and 1,210 euros per month, respectively.

Florence shows similar trends, with growth ranging from 1.6% to 2.6%, and average rates reaching 700 euros for a studio, 880 euros for a two-bedroom apartment, and 1,060 euros for a three-bedroom apartment.

In Naples, the situation is less uniform. Significant increases were observed in studio (+2.4%) and three-bedroom apartment (+2.1%) rents, while two-bedroom apartment rates rose by only 1.2%. The average rates range from 530 euros for a studio to 910 euros for a three-bedroom apartment.

Verona and Bari also maintain positive trends, although growth rates are moderate and vary by housing type.

Provincial capitals follow the national pattern

In the provincial administrative centers, the market is developing similarly to major cities, albeit at a slower pace.

In the latter half of 2025, rental rates increased:

• by 1.9% for studios;
• by 2.7% for two-bedroom apartments;
• by 2.4% for three-bedroom apartments.

Moreover, the rate of increase was lower than in the previous six months, indicating a gradual stabilization of the market.

Students' influence on the market structure

Changes are evident in the composition of lease agreements being signed.

Most transactions—59.3%—still involve tenants leasing for permanent residency. However, a year earlier, their share stood at 60.2%, indicating a slight decline.

The segment of student rentals is growing rapidly. The proportion of contracts signed by students rose from 11.1% to 14.1%, reflecting the increasing trend of international students coming to study in Italy.

Simultaneously, the share of contracts with flexible rent arrangements increased from 38.9% to 39.5%, while the number of short-term agreements remained almost unchanged at 33.4%.

The time taken to secure tenants is gradually extending.

Another market shift is the rise in the average rental period.

While a year ago it took an average of 31 days to find a tenant for a property, this duration has now increased to 34 days.

Although the difference may seem minor, amidst a persistent supply shortage, it suggests that potential tenants are becoming more discerning in their housing choices. The high rental rates are cited by experts as a key reason for this selectivity, prompting residents to more carefully assess the price-quality balance of available properties.