75% of real estate in Greece is purchased for cash

Three-quarters of real estate purchases in 2021 are made at the expense of buyers, without recourse to a bank loan, said Kyriakos Kampourisfounder and CEO of IMS, in the context of the recent Premium Real Estate Forum.

Number of houses sold in 2021 in Greeceis estimated at just over 40,000, based on the estimates of market players real estate. It is also worth noting the fact that 75% of these transactions were made exclusively for cash, i.e. without the mediation of a banking institution. Accordingly, only 25% or 1 in 4 transactions in the housing market today involve bank credit help. This element was pointed out by Mr. Kyriakos Kampourisfounder and CEO of IMS (Individual Mortgage Solutions), in the context of the recent Premium Real Estate Forum.

Given that, according to a recent report Bank of Greece on Financial Stability, 10,685 new home loans were disbursed in 2021, which means that the total number of homes changed hands last year exceeded 40,000, which is considered very satisfactory given the fact that for a significant period of the negative impact of the pandemic persisted for part of the year.

On the other hand, it becomes obvious that the real estate market has not yet returned to normal activity, at least in relation to the pre-crisis period. At that time, the picture was just the opposite, as more than 80% of transactions were made with bank lending, compared to 20% of transactions made without the intermediary of the banking system. Since the beginning of the last decade, and with the significant withdrawal of banks from the mortgage market, cash has become the “king” of real estate transactions, a trend that seems to continue to this day.

However, it is clear that the tightening of lending criteria has a negative impact on the increase in the volume of transactions and new loans. As stated at the same conference, Mr. Lefteris Potamianospresident of the Athens-Attica Realtors Association, compared to today, “there are still a lot of people who act impulsively and would be willing to take on a mortgage.”

As Mr. Potamianos noted, “We have clients who started buying a house but ended up renting it, as securing the required amount of mortgage is now much more difficult than in years past. Now the amount of collateral is different, and the assessment of the loan profile has become more difficult. Of course, this is right, as it avoids the creation of a new generation of non-performing loans.” However, there is a phenomenon where multiple stakeholders become “trapped”, that is, people who move to buy a home to avoid high rents end up finding that they do not have the financial capacity to do so.

As for the near future, it looks like the “window” for low interest mortgages will last until at least the end of the year, according to a recent BoG (Bank of Greece) report. On the other hand, household incomes were hit hard by the sharp rise in prices for goods and food, electricity and fuel, as well as the reduction in savings. However, first of all, the environment of high inflation and rise in prices hit the psychology of potential property buyers, which is a decisive factor in making such important decisions.

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