For decades, buying an apartment to rent out was the investment for Italian households: something you could see and touch, leave to your children, and that seemed sheltered from inflation. But with interest rates climbing again, house prices running at roughly the pace of inflation and BTPs (Italy’s government bonds) paying yields not seen in years, it is worth asking once more whether property is still worth the money.
The answer is not the same for everyone. It changes a great deal depending on whether you are investing savings, whether you already own an inherited apartment, whether you plan to buy with a mortgage or to bet on short-term rentals. There is one method, though, that works in every case: calculate the net yield, meaning what is left in your pocket after taxes, costs and surprises, and compare it with what the same sum would earn you with no effort at all.
Italy’s housing market today
According to provisional data from Istat (Italy’s national statistics office, in Italian) published on September 17, 2026, house prices rose 4% year on year in the second quarter of 2026. In the first quarter the increase had been 5.1%. New-build homes gained 5% and existing homes 3.7%. The gaps between cities are wide: Turin +8.5%, Rome +6.4%, Milan just +2.4% after years of steep increases.
Those figures have to be read alongside inflation, which Istat estimated at 4.2% in September. In real terms, then, the value of housing has been essentially flat over the past year. Anyone who bought to protect their wealth from the rising cost of living succeeded, but earned nothing.
Transaction volumes have stalled. In the second quarter the Real Estate Market Observatory of the Agenzia delle Entrate (Italy’s revenue agency, in Italian) counted 201,596 deals, a mere 0.1% more than a year earlier. Some 47% of private buyers used a mortgage, a slightly smaller share than before, with an average rate on the first installment of around 3.6%. Over the same period, residential lease contracts rose 3.1%, and 3.7% in municipalities officially designated as high housing-demand areas.
On the rental side, the Immobiliare.it Insights observatory puts the national average rent in the first half of the year at €14.7 per square meter per month, up 2.9%. In the most expensive cities, however, the run has stopped: rents fell 0.9% in Milan, 3.2% in Bologna and 0.2% in Florence. That is an important signal for anyone planning to buy on the assumption that rents only ever go up.
Property versus the BTP
A property investment should always be measured against what you can earn with no tenants, no maintenance and no paperwork. Today that benchmark is easy to find. On the morning of Thursday, October 15, 2026, the 10-year BTP yielded 4.51%, with the spread over the German Bund at 111 basis points. With the reduced 12.5% tax rate Italy applies to government securities, that leaves roughly 3.9% net a year.
The common view is that a home is only worth buying if it yields at least 2 or 3 points more than government bonds, a margin that compensates for the risks a BTP does not carry. An apartment cannot be sold in a day, it needs looking after, and it depends on whoever lives in it paying on time.
The figures quoted for rental returns are almost always gross, and for that reason they can mislead. According to Idealista, an Italian home returned an average of 8.6% gross in the third quarter of 2026, down from 9.7% the previous quarter. But that calculation simply compares the asking prices and asking rents of listings, before tax and expenses. In the big cities the percentage drops sharply: 6% in Rome, 5.4% in Florence, 5.2% in Bologna, 4.8% in Milan. The highest readings are in provincial capitals such as Biella (11%), Messina and Trapani, where it is also harder to find reliable tenants and to sell again.
Example: buying a €200,000 apartment as an investment
To see what is really left, it helps to work through an example with realistic numbers. Take a one-bedroom apartment worth €200,000 (about $216,000), bought as a second home from a private seller through an agency, with a cadastral income — the notional taxable value Italy assigns to a property — of €800. We rent it out at €1,000 a month on a standard 4+4 open-market lease, Italy’s four-year contract renewable for four more, for a gross yield of 6%, in line with Rome.
Before the first month’s rent even comes in, the purchase costs almost 10% more than the price. There is the 9% registration tax, calculated on the cadastral value thanks to the prezzo-valore mechanism, which bases the levy on cadastral value rather than on the price paid: roughly €9,070. To that you add the agency commission, worth about €7,320 at 3% plus VAT, the notary and the fixed duties. All in, the investment rises to about €219,000 (roughly $236,500).
Every year after that, the rent gets whittled down. We have assumed one month of vacancy or non-payment, IMU (Italy’s municipal property tax) at the maximum standard rate of 1.06%, the building service charges, or condominium fees, that fall to the owner, and insurance. We have also set aside 1% of the value for the major repairs that sooner or later are unavoidable: a boiler, a bathroom to redo, the building facade. Finally, the rent collected is taxed under the cedolare secca, Italy’s 21% flat-rate tax on rental income.
| Item | Annual amount |
|---|---|
| Theoretical rent (12 months) | €12,000 (about $12,960) |
| One month of vacancy or arrears | −€1,000 |
| IMU (1.06%) | −€1,425 |
| Condominium fees paid by the owner | −€600 |
| Major repairs (1% set aside) | −€2,000 |
| Insurance | −€200 |
| Cedolare secca, 21% on rent collected | −€2,310 |
| Net annual income | €4,465 |
Set against the €219,000 invested, that €4,465 net is a return of roughly 2% a year. The 6% gross, in other words, has shrunk to a third. Invested in 10-year BTPs, the same sum would produce about €8,600 net today, almost twice as much, with no effort whatsoever.
How much the home has to appreciate to be worth it
In this example the gap between the house and the BTP is about 1.9 points a year. That is the minimum appreciation the apartment has to deliver, year after year, simply to match the government bond. The calculation already takes in two advantages of bricks and mortar that are often underrated: rent that tracks inflation when the lease is renewed, and a property value that over the long run tends to follow prices.
It is also worth remembering that you pay the agency again when you sell, and that if you resell within five years of buying, the capital gain is taxed at 26%. Anyone working to a short horizon, perhaps with the idea of renovating and flipping, therefore has to factor in an even higher rate of appreciation. Over the past year, as we have seen, prices have done no more than keep pace with inflation. On top of that, the European Central Bank has raised rates twice in 2026, most recently on September 10, which makes mortgages dearer for whoever would have to buy the apartment from us tomorrow.
Property does retain one real advantage: it protects against inflation better than a fixed-rate BTP. At a moment when consumer prices are running at 4%, that is a serious argument to keep in mind. Anyone who wants the same protection without a tenant can also turn to inflation-linked securities.
Buying with a mortgage today turns leverage against you
Many people plan to buy the rental property with a mortgage, putting in less of their own capital and letting the tenant pay the installment. But the reasoning only works when the net yield on the property exceeds the cost of the debt. Today it does not.
According to figures from Facile.it, the average fixed mortgage rate in September was 3.46%, up from July. For a second home, banks typically finance a smaller share of the value and on less favorable terms. Go back to our one-bedroom apartment and imagine financing 70% of the price, that is €140,000 (about $151,000), at 3.5% over 25 years. In the first year the interest comes to roughly €4,900, more than the €4,465 net produced by the rent. The rent covers the installment, around €700 a month, but the investment itself loses money. It only becomes worthwhile if the property appreciates.
In finance this situation is called negative leverage: debt amplifies the gains when prices rise and amplifies the losses when they stand still. Buying a rental property with borrowed money today is therefore a bet on appreciation rather than an income investment.
What if the property was inherited?
Plenty of people already own an apartment, received through an inheritance, that yields very little. Here it pays to ask the question you would ask of any holding already in your portfolio: if I had the value of this house in cash today, would I buy it?
Take our example again. Selling the apartment for €200,000 and paying the agency leaves about €192,700 (roughly $208,100). On a property received through inheritance no capital gains tax is due. In 10-year BTPs that sum would earn around €7,600 net a year today, against the €4,465 from the rent, a return of about 2.3% on the realizable value. The difference, more than €3,000 a year, is the price you pay for keeping the house.
There can be excellent reasons to pay it: wanting to leave the property to your children, planning to use it yourself one day, or betting on a neighborhood set to improve. It should be a deliberate choice, though, rather than simple inertia, and the weight of the property within your overall wealth matters too. For many Italian families, real estate already accounts for the largest part of their net worth, and a second apartment concentrates the risk still further on a single asset, quite possibly in the same city.
Tenants, evictions and the canone concordato
The fear most commonly voiced by small landlords is still the tenant who stops paying. Figures from the Viminale, Italy’s interior ministry, show that eviction orders numbered 37,122 in 2025, down 7.6% on the previous year, and that 18,292 were enforced by a bailiff.
Those numbers are modest against the millions of leases in force, but anyone who goes through it risks losing many months of rent, on top of legal costs and damage to the property. That is why our calculation allows for one month of missed income a year, and it is a prudent estimate only if the tenant is chosen with care. Before signing, it is always worth asking for documents proving income, meaning pay stubs or a tax return, a full security deposit and, if necessary, a bank guarantee.
The canone concordato, a capped rent set by local agreements between landlord and tenant associations, is an often overlooked tool that changes the math more than people think. In exchange for a lower rent, the cedolare secca falls to 10% in high housing-demand municipalities, and in all municipalities IMU is paid at 75% of the normal amount. Redoing the calculation with a rent 15% lower, the annual net stays practically identical: about €4,550 against €4,465. The landlord pockets almost the same. Tenants who accept a lower rent also tend to stay longer and pay more reliably, which reduces the risk of vacancy as well.
With short-term rentals, the gap between gross and net is even wider
Vacation rentals promise far higher revenue, but the costs are proportional. From the price the guest pays you have to strip out the platform commissions, cleaning and laundry at every changeover, utilities, furniture that needs replacing and, unless you handle everything yourself, the fee for a property manager. The figure that really makes the difference is the occupancy rate. Professional operators manage to keep the apartment occupied for most of the year, while a private owner with a single unit often falls well short. In the busiest cities, moreover, supply has grown enough to squeeze nightly rates.
Under Italy’s 2026 Budget Law, the 21% cedolare secca applies to a single property of the owner’s choosing; on the second it rises to 26%, and from the third apartment rented short-term the activity is presumed to be a business, with a VAT number and social security contributions. Every unit must also carry the codice identificativo nazionale (CIN), Italy’s national identification code for short-term rentals, and several municipalities have introduced or are weighing limits in their historic centers. Anyone buying today to run short-term rentals has to reckon with the rules changing again during the life of the investment.
Watch out for rules that change
A house stays in the same place for decades, exposed to the decisions of national and local government, and that is perhaps the hardest risk of all to measure. In Italy, IMU is set by the municipality, which can raise it, and renovation tax breaks change almost every year: without a fresh extension, from 2027 the renovation bonus will drop from 50% to 36% for a main home and from 36% to 30% for other properties. The government approved its Budget Planning Document on October 13, and confirmation of the current rates is under discussion, but nothing is certain until the budget is passed. For anyone buying to let who expects to resell within a few years, renovating without a meaningful tax break rarely pays for itself.
What is happening in Spain shows how fast politics can move when housing becomes a social emergency. At the end of September, after large protests over the cost of renting, the Sánchez government approved a decree suspending evictions of vulnerable families until 2030 and extending expiring leases. On October 2 the Congress of Deputies voted it down, and on October 6 the executive put it forward again. Italy went through something similar with the eviction freeze during the pandemic, which ended in late 2021. Anyone investing in residential property needs to know that their return also depends on political choices they have no control over.
So, is property still worth investing in?
With government bond yields close to 4.5%, buying a home to rent out in a major city is only worthwhile on precise conditions. The net yield has to come close to that of a BTP. You need a long horizon to absorb the costs of getting in and out. The purchase price has to be genuinely good, because that is where most of the outcome is decided. And you need the time and the patience to manage tenants and repairs. Anyone who buys simply because bricks and mortar «never let you down» risks accepting a slim 2% return behind the facade of a safe investment.
Before signing a preliminary contract, the most useful thing to do is to redo the table above with the real numbers of the property you are considering. Start from the total price including taxes and agency fees, put in the rent the area can genuinely sustain, and subtract property tax, service charges, maintenance, one month of vacancy and taxation. Divide the result by the total outlay and compare it with the net yield on a government bond of similar maturity. If the difference is negative, you are paying for the privilege of owning a rented apartment, and you had better be sure that is what you want.
Anyone who wants exposure to real estate without the management headaches can also look at funds and ETFs that invest in listed property companies. They are liquid and diversified across many buildings and countries, but their value swings on the stock market like any equity.
This article is for information purposes only. It is not an offer of investment products, nor financial or tax advice. Past performance is not indicative of future results. For your own tax position, consult a qualified professional.
Editor’s note
This article was originally published in Italian on money.it by Flavia Provenzani on October 18, 2026 as «Ma conviene ancora investire nel mattone?». It has been translated and adapted for an international audience by the Money.it International desk.
