From the third quarter of 2017 to the first quarter of 2023, house prices in Greece grew up by an average of 49.3%. However, this applies to relatively new facilities, old buildings and apartments after repair began to cost at least 2, or even 3-4 times more expensive.
The imbalance between supply and demand has led to rising property pricesnotes Eurobank in your market analysis. According to him, demand was positively affected by an increase in nominal household disposable income, a decrease in unemployment, an increase in employment, an improvement in the economic climate and a sharp increase in foreign direct investment in real estate, recorded recently.
Unemployment rate seasonally adjusted to 11.8% of the workforce in the first quarter of 2023, down 11.5 percentage points from the first quarter of 2017. Over the same period, employment increased by 12%, or 438,700 people, helping to increase nominal household disposable income from €116.1 billion in 2017 to €137.3 billion in 2022 (an increase of 18.3% or 7 .6% in real terms).
And although the increase in the number of employed led to an increase in the level of nominal income of the population, it was offset by a sharp increase in prices for food and energy, which, as a result, led to an actual decrease in the real standard of living of the population by at least 30%.
In addition, expected resources from Recovery and Resilience Fund, and the expected reform-investments accompanying it have improved the outlook for the economy. Also in the last five years there has been a sharp increase in foreign capital invested in Greek real estate.
FDI in real estate management from 69.5 million in 2017 to 1.03 billion in 2022, while direct foreign investments in private real estate sales from 327.8 million in 2017 to 922.7 million in 2022. These changes were due to low real estate valuations, the debt crisis, the growth of the country’s tourism product and the Golden Visa program.
On the supply side, Eurobank cites low levels of investment in housing construction, skyrocketing material prices by nearly 20% over the past two years, and many foreclosed homes not selling.
According to the Bank of Greece, the annual growth rate of apartment prices throughout Greece was 14.5% compared to 13.6% in Q4 2022 and 10% in Q1 2022.
In terms of prices in the country’s two largest urban centers, prices in Athens rose by 16.5% year on year, from 11.6% in Q1 2022, and in Thessaloniki, by 16.1%, from 9.9% in the 1st quarter of 2022. From Q3 2017 to Q1 2023, house prices in Greece as a whole rose by 49.3%, reversing much of the losses incurred during the debt crisis.
Note that from Q3 2008 to Q3 2017, when nominal GDP and nominal fixed investment in Greece fell by 26.8% and 52.7% respectively, apartment prices fell by 49.3% and are currently about 10% below their pre-debt crisis levels. This factor, taking into account inflation over the past 15 years, is within 50%, as well as the performance of the EU-27 and the eurozone, where house prices are significantly higher than in the late 2000s, give investors a reason to actively buy Greek real estate.