Despite favorable economic conditions, property prices remain stubbornly elevated, forcing an increasing number of families to shift from buying to renting—where rates continue their upward climb
After a promising start to the year that hinted at recovery, Florence’s real estate market has returned to a standstill. According to Nomisma’s 3rd Real Estate Market Observatory 2025, growth flatlined in the second half of the year, hampered by stagnant demand and a less dynamic pricing environment than in previous months.
The first half of 2025 saw 2,340 residential transactions in the city—virtually unchanged from 2024 (-0.9%). The contrast with national trends is stark: across Italy, transactions surged 9.5%, underscoring Florence’s divergence from other major metropolitan areas.
Despite the slowdown, prices continue their ascent. New or renovated properties in prestigious areas appreciated up to 3.5%, while well-maintained homes in peripheral zones saw even steeper increases—up to 5.1% annually. Average selling times have shortened slightly to 4.4 months, with negotiation discounts dropping to 6.5% for new construction and 11% for existing properties.
The rental market, however, tells a different story. Lease rates jumped 4.4% year-over-year, driven by robust demand from singles, young couples, and families priced out of homeownership. Gross rental yields remain stable around 5.3%, confirming Florence’s continued appeal to investors.
Sonia Messori, economist at Nomisma, attributes this phase to favorable yet insufficient conditions for reviving sales. “Inflation is low, household purchasing power is recovering, and mortgage rates are more contained than in the recent past. However, forward-looking indicators suggest the market will remain flat: we expect both transactions and prices to stagnate through 2026, across both residential and commercial segments.”
The sole exception? Rental rates, which are poised to keep climbing. “Rental demand in Florence is exceptionally strong,” Messori explains, “and this will continue pushing lease prices upward. Sales prices, meanwhile, remain prohibitively high relative to household budgets, hampering transaction volumes. Many families who would prefer to buy are effectively being redirected toward renting.”
For new or renovated properties, the most significant increases occur in central and prime areas, while homes in good condition in suburban areas show the strongest growth. “Between downtown and prime locations,” Messori notes, “disparities remain wide, reflecting a market moving at multiple speeds.”
The report also examines nonresidential real estate. Office sales plummeted 26.5 percent-one of the sharpest declines among the cities monitored by Nomisma. Prices have remained roughly stable with a marginal 1.2 percent contraction, and average sales times are around 6.5 months. More positive signals came from the retail sector: store transactions remained stable (+0.7%) with rents rising slightly. Gross profitability reached 6.8 percent-the highest level in 20 years.
According to Nomisma, a real turnaround will require even more favorable conditions. “Only with further reductions in interest rates and a more robust recovery in purchasing power can we expect a decisive return from renting to buying,” Messori concludes. “For now, stability remains the watchword.”
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Source: Florence Today
