Housing rent dynamics in Italy

In this paper we focus on tenant rents in Italy and compare results from several methods for the rent dynamic estimation. We first document the sources of data available and then introduce quality adjusted techniques, which enable us to separate the price variation due to qualitative changes in housing attributes from pure price changes. Finally, we compare these measures with unconditional and matched-type price indices derived from microdata. Over the period 1998-2006, we estimate a cumulative rent increase ranging between 40 and 80%. The upper bound refers to the average dynamic for a subset of flats entering the market in a given period. Our hedonic estimates point to an average rent increase of approximately 40%, almost 20 percentage points above the one recorded by the rent component of the Italian consumer price index. A simple calibration model suggests that only part of the difference between our estimates and the official ones is due to survey non-response.