Rent or buy a home: which option is more advantageous in Italy?
The European Central Bank's recent reduction in interest rates from 2.75% to 2.5% has made monthly payments on variable mortgages less costly for prospective homebuyers. A study by Maiora Solutions indicates that purchasing property in Italy's major urban areas is now more beneficial than renting.
Maiora Solutions, a firm specializing in AI-driven market intelligence, assessed over 5,000 properties listed for sale and rent using their AI platform EPONA. The study focused on a 25-year variable mortgage with an interest rate of 2.85%, the current minimum, covering 90% of the property's cost.
Research findings: buying is more profitable in most cities
The evaluation centered on the average costs of buying and renting one-, two-, and three-room apartments in Milan, Rome, and Naples as of March 2025.
Milan: Save up to 7% on your purchase
In Milan, owning a home proved more lucrative than renting for all apartment sizes:
- One-room apartments: average mortgage cost is 940 euros compared to 980 euros for rent (+4% in favor of buying).
- Two-room apartments: mortgage payment is €1,400 versus €1,500 for rent (-7%).
- Three-room apartments: mortgage payment averages 2065 euros, rent is 2225 euros (-7%).
Rome: Purchasing a one-room apartment saves nearly 50%
In Rome, the advantages of taking out a mortgage are even more pronounced:
- One-room apartments: mortgage payment is 550 euros, rent is 1040 euros (-47%).
- Two-room apartments: mortgage is 1090 euros, rent is 1400 euros (-22%).
- Three-room apartments: mortgage is 1530 euros, rent is 1870 euros (-18%).
Naples: Mortgages are beneficial for one- and two-room apartments, less so for three-room apartments
In Naples, the scenario is similar, with the exception that renting is slightly more advantageous for three-room apartments.
- One-room apartments: mortgage is 400 euros, rent is 660 euros (-39%).
- Two-room apartments: mortgage is 650 euros, rent is 890 euros (-34%).
- Three-room apartments: mortgage is 1210 euros, rent is 1200 euros (renting is slightly cheaper).
Prospects: risks and opportunities
Though buying is currently a favorable option, experts caution that interest rates may fluctuate in the coming years. A rise could make variable-rate mortgages more costly, potentially making renting appealing again. Additionally, homeowners face potential maintenance expenses and taxes.
Analysts suggest potential buyers:
- Carefully compare mortgage options and consider fixed rates as an alternative.
- Examine the city's economic outlook to prevent depreciation of property value.
- Assess your planned duration of stay: if you intend to relocate within a few years, renting remains a more adaptable choice.
Mortgages are becoming an appealing option again
Maiora Solutions' research indicates that with interest rates on the decline, property ownership is becoming a more enticing choice than renting in many large cities. This could lead to more individuals opting to buy property, benefiting from better financing conditions and the constant development within the real estate market.
