The Bank of Greece’s report on the real estate market presents a detailed analysis of the current situation. Over the past seven years, property prices have surged by 66.4%, and they are projected to increase by 10.4% in the first quarter of 2024. This growth rate is significantly higher than the rise in income.
The report indicates that property prices are expected to continue rising, potentially creating a self-fulfilling prophecy that the price rally will persist into 2024. However, it also highlights a critical concern: property prices have significantly outpaced the purchasing power of Greeks, leading to “uncertainty.” This discrepancy affects not only real estate investors but also borrowers, banks, professionals in the real estate market, and the national economy as a whole.
Key points from the Bank of Greece’s analysis include:
- Positive Expectations: Driven by tourism (hotels, Airbnb), infrastructure improvements (area regeneration projects), and the gradual renewal of the building stock with modern, high-cost constructions, expectations for the real estate market remain positive.
- Upward Trend in Prices: Based on these factors, it is estimated that the upward trend in property prices will continue.
The report also identifies the core issues in the Greek real estate market:
- Investment Demand: The market continues to attract investment, particularly from abroad, pushing prices further up.
- Disproportionate Prices: Current price levels are disproportionate to disposable incomes, complicating the acquisition of first homes and driving both house prices and rents upwards. This makes housing a critical issue for Greek households.
The Ongoing “Party”
According to the Bank of Greece’s apartment price indices, the upward trend in housing prices persisted in the first quarter of 2024 with significant annual growth rates. The chart from the Bank of Greece shows exponential price increases in recent years, with annual growth rates often exceeding 5%, 10%, or even 15%.
Specific data from credit institutions indicate:
- First Quarter of 2024: Nominal apartment prices rose by 10.4% year-over-year (provisional data).
- Full Year 2023: Apartment prices increased at an average annual rate of 13.8% (revised data).
Despite these strong annual growth rates, there has been a noticeable slowdown in quarterly growth over the last four quarters.
It is noteworthy that house prices are now only 4.1% below the all-time high recorded in the third quarter of 2008, just before the financial crisis. Compared to the lowest prices recorded in the third quarter of 2017, prices have increased by 66.4%.
This analysis underscores the complex dynamics of the Greek real estate market, where rapid price increases driven by various factors pose significant challenges for affordability and economic stability.
