Short-term rentals: prices are levelling off after years of rises

After several years of significant rises, the short-term rental market in Italy appears to be entering a period of greater stability.

According to data compiled by Immobiliare.it Insights, following a price rise of around 35 per cent since 2021, the rents asked for this type of tenancy have risen by an average of just 1 per cent over the past year.

A figure that could indicate that a new equilibrium has been reached between supply, demand and prices.

What are short-term lettings?

Before analysing the data, it is worth clarifying what is meant by a temporary tenancy agreement.

This is a tenancy agreement designed to meet temporary and verifiable housing needs, generally with a term of between 1 and 18 months.

It may be used, for example, by those who need to move temporarily to another town for work, study, training or other specific reasons provided for by the relevant legislation and local agreements.

It should therefore not be confused with holiday lets or short-term lets: a transitional tenancy agreement addresses a temporary housing need, which must be specified in the contract and, where required, properly documented.

Prices have remained virtually unchanged over the past year

The most interesting figure relates precisely to the trend in rents.

After years of sustained growth, the national average increase has levelled off at around 1 per cent over the past year, with an average price of approximately 18.2 euros per square metre.

This does not necessarily mean that rents are becoming cheaper. Rather, the strong growth seen in recent years appears to have slowed considerably.

According to the analysis, this would represent a natural evolution of the market following a particularly buoyant period.

The differences between Italian cities remain significant

The national average, however, only tells part of the story.

Regional differences, in fact, remain very pronounced.

Among the cities analysed, Trieste stands out, where short-term rental rates have risen by 29 per cent year-on-year and by a total of 64 per cent over five years. Turin also continues to see growth, with an 11 per cent increase.

The situation is different in markets that are traditionally more expensive.

Milan remains the city with the highest rents, averaging around 25.5 euros per square metre, but has seen a 1 per cent fall over the past year. Signs of a slight decline are also evident in Bologna and Florence.

At the other end of the scale is Messina, which, at around 9.6 euros per square metre, is the cheapest city among those included in the analysis.

Demand is also slowing

The slowdown is not limited to prices alone.

Nationwide, demand for short-term rental properties has also fallen by 1 per cent over the past year.

Once again, however, there are significant regional variations. In Brescia, for example, demand has risen by 40 per cent, whilst Bergamo and Catania have seen falls of more than 24 per cent.

This shows just how difficult it is to talk about a single national rental market: demand and prices can vary significantly from one province to another and even between different areas of the same city.

The supply of properties is also falling

On the supply side, the number of properties available for this type of tenancy has fallen by 5 per cent nationwide.

Here too, the situation varies considerably: in Bergamo, the stock of available properties has risen by 49 per cent, whilst in Messina it has fallen by 26 per cent.

The market therefore appears to be going through a period of stabilisation, during which it becomes even more important to assess the specific situation of the local area in which the property is situated.

What does this mean for landlords and tenants?

For landlords, the stabilisation of prices means that the increases seen in recent years can no longer be taken for granted. Setting the right rent is therefore essential to avoid offering the property at a price that is out of step with actual demand.

For tenants, on the other hand, the slowdown could be an early sign of greater stability, even though rents generally remain higher than they were a few years ago.

In both cases, it is important to bear in mind that a transitional tenancy agreement has specific characteristics and requirements and should not simply be used as a shorter-term alternative to a standard tenancy agreement.

Short-term lettings: knowing the market makes all the difference

Following 35 per cent growth since 2021, the sharp slowdown seen over the past year marks a significant change.

Rather than a genuine fall in prices, for the time being we can speak of a period of stabilisation in the short-term rental market, although the situation varies considerably from place to place.

For property owners considering letting out their property, it is therefore important to choose the right type of tenancy agreement, the term and the rent, taking into account both the relevant legislation and the characteristics of the local market.

La Baita Case operates in the property letting and sales sector in the province of Sondrio, supporting landlords and tenants in choosing the contractual arrangement best suited to their specific needs.

Data source: Locare.it, based on an analysis by Immobiliare.it Insights.