Prices in the Greek housing market are rising at a faster rate than in the rest of Europe, making up for lost ground after a prolonged period of economic crisis.

The increase in investment, especially in construction, but also Foreign Direct Investment (FDI) in real estate, the development of tourism and the sharing economy, the Golden Visa program and the accumulation of savings during the pandemic, are the differentiating factors the domestic market of residential real estate in relation to the corresponding markets of other developed countries, where, according to the most recent data, there is either a slowdown in the rate of price growth, or even a decrease in them.

The question is therefore whether the upward trend in the Greek housing market will continue in 2024.

Non-cyclical demographic factors, such as population aging and urbanisation, but also seasonal reasons, e.g. the lack of high-energy-efficient housing and subsidized housing programs like "My Home" continue to ensure high demand, real estate market experts say.

They point out, however, that price corrections will need to be made in the near future, especially with regard to the requested sales prices, as there is a relative "fatigue" of potential buyers, especially the Greeks, resulting in fewer contracts being made.

In the event that the supply increases, i.e. if the properties that the funds keep in their drawers come on the market, interest rates fall, construction costs improve and there are no unpleasant surprises at the geopolitical level, which will push up energy prices and by extension the inflation, this correction, at least in nominal terms, may be achieved.

The upward trend in prices

The recovery of the residential real estate market, which began in 2018, continued throughout 2023, registering a double-digit rate of price change.

It is noted that the prices of residential properties compared to the high they recorded before the financial crisis have cumulatively recovered by 57.5%, according to the data of the Bank of Greece (data for the 9th month of 2023).

Specifically, based on the apartment price index compiled by the Central Bank for the entire country, the highest value of the index was observed in 2008 (101.7) and then followed a steady downward trend, to record the lowest value in 2017 (59 ).

Since then, the apartment price index has recorded a steady upward trend, reaching 92.9 in Q3 2023, just 8.65% short of its all-time high.

The "strangers" factor

However, as can be seen from the figures of the Central Bank, during this period the difference in the market is made by foreign investors, while the purchases from Greeks are limited and are made with equity capital.

It should be noted that foreign direct investments for the real estate market recorded a significant increase during the 9th month of 2023 and reached net receipts of 1.644 billion euros, exceeding by 28.7% the corresponding level of receipts recorded in 2022 (1.277 billion euros ).

Therefore, given that the market remains highly dependent on inflows of foreign capital, it is possible that there will be corrections.

However, in the high end of the residential real estate market, i.e. luxury homes, in an environment of high interest rates, Greece ranks among the "emerging markets" based on the report of the real estate services provider Berkshire Hathaway HomeServices, standing out as a leading European destination along with Portugal and Spain, but also among the countries worth watching around the world due to the lowest prices.

The Golden Visa and the example of Piraeus

The "Golden Visa" program is also a barometer for the evolution of demand from abroad.

Based on the most recent data from the Department of Immigration, 9,459 permanent investor applications were submitted between January and November 2023, an increase of 117% compared to the 11th month of 2022. Initial grant applications were 7,752, which equates to real estate investments of at least 1.9 billion euros. In total, the program has attracted more than €5 billion in capital since it came into effect in mid-2014.

The doubling of the limit for obtaining the "Golden Visa" to 500,000 euros in popular investment areas for foreigners from third countries, namely the central, northern and southern sectors of Attica, Mykonos, Santorini and the Municipality of Thessaloniki, has turned the interest to other areas, such as Piraeus, where the investment limit remains at 250,000 euros.

According to the data of the Spitogatos Property Index (SPI), Piraeus and its suburbs, with an increase of 23.2% and 25.6% respectively, emerged as "champions" in Attica in terms of the annual change in asking prices in the fourth quarter of 2023.

Specifically, the average asking price in Piraeus now reaches 2,175 euros per sq.m., from 1,765 euros per sq.m. a year ago, in the areas around the country's largest port, the average asking price reached 1,800 euros per sq.m., compared to 1,433 euros per sq.m. during the fourth quarter of 2022.

This large – and largely steep – increase in asking prices in Piraeus is likely to be seasonal, note brokers and law firms specializing in investment immigration programs, pointing out that many of the properties on offer do not have the investment characteristics that investors are looking for. , e.g. they are not easy to exploit as short-term rental accommodation.

The cheapest areas

In Attica, the areas around Piraeus, despite the huge increase recorded in the demands of the owners, remain the most economical.

The second most economical areas in terms of asking sales prices in the residential sector of Attica are in the western suburbs, where an annual increase of 18.7% was recorded in the fourth quarter of 2023 to 1,875 euros per sq m, as well as in the rest of Attica with the same price.

The most economical area in Thessaloniki is located in the rest of the prefecture where prices recorded an annual increase of only 1.1% in the fourth quarter of 2023, to 821 euros per sq.m.

Apart from Attica and Thessaloniki, opportunities are found in the prefectures of Pella, Serres, Kilkis, Aitoloakarnania, Arta, Grevena, Drama, Imathia, Ilia, Kastoria, Kozani, Lesvos, Karditsa, Rodopi, Samos, Florina and Trikala.

In all these areas, the asking prices of houses are below 1,000 euros per sq.m.

At this moment and always based on the SPI index data, the lowest asking price is located in Kastoria, where the largest decrease in average asking prices of houses was recorded (-15.40%), in the fourth quarter of 2023 .

Date: 08/04/2024