The cost of living in Milan is on the rise: housing expenses are increasing faster than incomes

Milan's housing market is showing an expanding gap between housing costs and income levels. As per the third report from the Affordable Housing Observatory (OCA) in April 2026, the challenges of affording housing are no longer a temporary issue but a persistent structural concern.

The report highlights the growing difficulty of sustaining life in Milan based solely on earnings: housing and transportation expenses could consume up to 60% of monthly income. This issue has transcended the city's administrative boundaries and now affects the entire Milanese agglomeration.

Despite being an attractive center for work and education, Milan is increasingly becoming unaffordable for its residents. Experts caution that without a long-range plan, this situation could severely impact the city's social and economic equilibrium.

Rising prices outpace wage growth

In 2024, housing costs continued their upward trend:

• Real estate purchase prices rose by 8.5%;
• Rents increased by 6.8%;
• Average wages saw only a 4.2% growth, falling below the inflation rate.

The situation is even direr for middle- and low-income earners:

• Income for workers grew by a mere 3.7%;
• Salaries for office workers increased by 2.6%.

The widening gap between the cost of living and income is increasingly hindering the ability to rent or buy a home. Family savings, assistance from relatives, or external financial aid are becoming more crucial.

Increasing instability in the rental market

The average rental price in Milan has reached 201 euros per square meter annually. Concurrently, long-term rental agreements are decreasing while temporary and flexible rental options are on the rise.

Even housing categorized under "agreed rent," previously seen as more affordable, is now approaching market rates in price. Consequently, this approach is losing its social purpose.

Income disparity and shrinking housing

The income distribution in Milan illustrates significant social divides:

• Over half of taxpayers earn less than 26,000 euros yearly;
• Almost a third earn less than 15,000 euros.

Given this scenario, the average resident can afford progressively smaller living spaces. In numerous cases, the available square footage falls below the minimum housing standards on the market.

The housing issue is not just complex anymore; for many, it has become an insurmountable challenge.

Milan's unofficial population surpasses the official count

A notable discovery from the study was the variance between the official resident count and the actual populace in Milan.

Using mobile phone data, analysts inferred that while Milan's official population stands at 1.4 million, over 1.6 million individuals reside in the city permanently. This figure includes students, temporary workers, and unregistered individuals.

This exerts added pressure on the rental market, transportation, and municipal services.

Short-term rentals exacerbate the crisis

Post-pandemic, the short-term rental sector has experienced rapid growth. More properties are transitioning into the tourism sector, diminishing the availability of long-term housing for city residents.

Over the past five years:

• Long-term rentals have decreased from 66% to 51%;
• Temporary and short-term leases now occupy nearly half of the market.

This trend reflects Milan's increasing allure to tourists but also heightens instability for permanent residents seeking housing for work and residence.

The inadequacy of hotel infrastructure further strains the private housing stock.

Housing crisis extends beyond Milan

Housing affordability challenges are not confined to Milan alone but also affect adjacent municipalities in the metropolitan area.

Even in well-connected municipalities near Milan, rental prices are surging. Many residents are moving further from the city center to cut costs, yet savings are marginal due to transportation expenses.

According to the study:

• Housing and public transit can consume 50-60% of income;
• With car usage, this percentage can reach up to 80%.

Apart from the financial strain, this situation spawns additional environmental and infrastructural issues.

Comprehensive action is imperative

The report's authors stress the interconnection between housing concerns, social policies, urban planning, and the labor market.

The lessons from suburban areas highlight the necessity for:

• collaboration among municipalities;
• coordinated management of the urban agglomeration;
• integration of housing policies with social welfare systems.

Special focus is placed on the relationship between housing and employment. The high cost of living is already impacting companies' ability to attract and retain staff. Consequently, temporary housing solutions tied to employment are gaining traction.

A sustainable, long-term approach is essential

The report's conclusion underscores housing as essential infrastructure crucial for the city's economic competitiveness and social equilibrium.

Experts advocate that affordable rent should not exceed 100-110 euros per square meter annually. Once this threshold is surpassed, even vital professions necessary for the city's functioning start facing challenges in the housing market.

Simply analyzing the issue is no longer sufficient. Milan requires a comprehensive, enduring policy integrating housing, transportation, and employment matters on an urban agglomeration scale.