Greek Real Estate Market : Evolution and prospects (2024)

Article by Kioleoglou Konstantinos / 08:41, 08.05.2024

The fluctuations in house prices in Greece over the last decades are impressive. According to available data published by the Bank of Greece, house prices reached their peak values in the third quarter of 2008, when the CBE Index reached a value of 102.2. The market was then on a frenetic course, having been preceded by the country’s first period of entry into the eurozone, where strong credit expansion, easy and relatively cheap borrowing and a large increase in mortgage lending fueled unstoppable demand for housing and price increases.

The financial crisis led to a fall in prices quite unusual for a developed economy in peacetime, exceeding 40%. The BoE Price Index fell to its lowest point in the third quarter of 2017, when a value of 58.9 was recorded. It is noteworthy that the fall in house prices was unprecedented even compared to the corresponding decline in the country’s GDP, as about a quarter of the Greek economy’s output was lost in the crisis.

At the end of 2017, the price recovery began, which cumulatively between Q3 2017 and Q3 2023 reached 36.5%. The BoE Price Index rose to 92.9 points at the end of Q3 2023. Over the past two years, the annual rate of price growth has remained consistently above 10%.

Specifically, house sales prices rose last year at an average annual rate of 13.4% across the country, according to Bank of Greece data. This growth outpaced that of 2022, when they had risen by 11.9%.

The returns on Greek real estate and the capital gains that have been generated over the past five years are impressive. Characteristically, and as shown by the Bank of Greece’s price indices, from the beginning of 2018 to the end of 2023, the average selling prices of houses nationwide have increased by 60%. It is obvious that the real estate market does not operate horizontally and is multifactorial. Thus, we observe that in the same period, in Attica, the average increase reaches 79%, having now returned to the previous high level recorded in 2007-2008.

It is obvious that in areas such as the Athenian Riviera, with particular characteristics such as location, views and accessibility to beaches, etc., the increases are impressively higher and sales prices far exceed the historical highs recorded so far.

In the last two years, positive growth prospects have been seen almost throughout the Greek market, with impressive increases recorded in many areas. A typical example is Thessaloniki, where prices increased by 16.2%, up from 12.7% in 2022. A similar upward trend was observed in other major cities, where the increase in 2023 amounted to 14.5% (11% in 2022), while in the rest of the country, house prices increased at an average annual rate of 10.8% (8.2% in 2022).

After a period of absolute inactivity, the Greek market has managed to attract the interest of Greek and foreign buyers and investors, highlighting as the main axes of investment interest the stability and growth prospects of the economy, the stable investment environment and the willingness for innovative changes that will lead to an even more friendly and sustainable investment environment.

International circumstances, inflationary pressures, high interest rates and uncertainty in international markets are putting intense pressure on all markets. Already huge markets such as Germany’s seem to be collapsing. Typically, according to a Reuters article, in the third quarter of 2023 values declined by 10.2%, a historic low for the German market since statistics began to be recorded, and the downward trend continued in the following period. Germany’s real estate industry with a turnover of 670 billion euros ($722 billion) is a critical pillar of its economy, contributing one in 10 jobs, almost a fifth of output, and dwarfing the country’s famed auto sector, according to the industry association ZIA. And yet, at the current juncture, it seems unable to withstand the pressures. Other markets are in a similarly difficult position According to Eurostat, house prices fell by 1.1% in the euro area and rose by 0.3% in the European Union in the fourth quarter of 2023, compared to the same quarter in 2022. The Greek market, starting from another much lower base due to the crisis period, seems to have both resilience and prospects.

Nevertheless, one of the conclusions, based on the central bank’s data, is that the rate of price growth has started to slow down. Specifically, in the fourth quarter of the year, prices across the country rose by 11.8%, compared to an increase of 12.1% in the immediately preceding quarter and 15.4% in the first quarter of 2023. The same phenomenon was also recorded in the other regions of the country, with the increase in Attica in the fourth quarter reaching 10.8%, compared to an increase of 12.3% in the third quarter and 17.3% in the first quarter of 2023.

Due to the specificity of the Greek real estate market and given the strong demand from foreign buyers and investors who now seem to have placed Greece among the top investment destinations for both residential purchase and large investment projects, the outlook remains positive. The picture presented by the indices, with a slight correction in the rate of price growth, is an indication that some resistance may have begun to emerge among interested buyers, which could be followed by a possible reduction in buyer interest. Given the cyclical nature of the market and provided that this correction is within reasonable limits and does not have abrupt characteristics, it is to be expected.

At this point it should be made clear that any “shock” in the market could be catastrophic and irreversible In recent weeks, the questioning of provisions of the NOC and the legality of permits issued under the provisions of the existing legislation, combined with the intense confrontation between the central government and the decentralized government on this issue, has led to a sense of general concern regarding the security of transactions in the real estate market, the preparation of new investment projects, the completion of legal transactions and the implementation of new projects.

The issue is not only about newly built properties. The market does not operate in a vacuum. The prices of newly built properties are dragging down the prices of older properties but also land values, rental income but yields. The real estate market and the construction industry are directly linked to the whole society, economic indicators, unemployment, budgeted government revenues as they directly or indirectly influence and interact with dozens of professional sectors that also affect household disposable income.

The market, provided that logic and calm prevails to find a mutually acceptable solution by all stakeholders on the NOC issues and given the government’s intention to support and ensure a stable fiscal and legislative environment, has positive prospects. A small correction observed is expected and acceptable and in any case within the context of market cyclicality and permissible fluctuations. The supply and demand relationship remains stable with the need for new housing at high levels. As we await developments in the coming days it is good to remember that the housing market does not operate horizontally and depends on many factors. The resistance and prospects of properties differ depending on the parameters that characterise them. Having already entered the second quarter of 2024 with a positive outlook and upward trends, developments will determine the results of the first half of 2024 for the market, as reflected in the price indices and statistics of the BoE.

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Author : Kioleoglou Konstantinos REV, Meng Civil Engineer NTUA , Msc Real Estate Investment and Finance , Expert Property Valuer by Tegova ,MP Avakon