Palermo is the cultural, economic and tourism capital of Sicily and the fifth largest city in Italy. It is the largest port on the island and is home to many cultural and historic attractions which speak to its rich heritage and, along with its renowned gastronomy and favourable Mediterranean climate, is a long-standing soft spot in the hearts of buyers and renters alike. With the lowest prices and rents per square metre of major Italian cities, Palermo also offers more affordable living compared to other hubs.

Significant growth in transactions has been a key differentiator for Palermo, rising by 11.3% on 2019. Demand was sustained even during the pandemic, supported by  the combination of affordability and city life that Palermo provides.

Price growth was flat in 2023, however, and declined by -2.5% on pre-pandemic levels, largely driven by an oversupply of stock and a lack of new developments. Palermo remains a predominantly domestic market for prime residential, with approximately 80% of all buyers being Italian, meaning global trends have less impact on prices here compared to its other city counterparts. However, there is a growing interest from international buyers from the United States, UK, and France.

Palermo’s rental market has seen marginally higher growth than that seen in the sales markets, rising by 0.9% in 2023, but rents are down -2.6% on 2019. The prime rental market also suffers from oversupply and lack of new development as the sales market, albeit to a lesser degree.

Prime residential prices and rents in Palermo are set to decline marginally over 2024, as elevated interest rates will likely make the economic environment more difficult. However, this stability and slow price growth likely works in Palermo’s favour, as it remains an attractively priced alternative to its much more expensive competitors.