The Bank of Greece (BoG) is sounding the alarm on property prices as they have risen by 66.4% over the past 7 years and will rise by 10.4% in the first quarter of 2024.
The Bank of Greece says property prices will continue to rise, creating a sense that the price rally will continue into 2024. However, he notes that prices have seriously deviated from the purchasing power of the Greeks, and this is creating “tension in society.”
Bank of Greece on Real Estate
According to estimates collected by credit institutions, in the first quarter of 2024, nominal prices for apartments grew by 10.4% per year, and for the whole of 2023, prices for apartments increased significantly, by an average of 13.8%.
The housing crisis and shortage of supply have reportedly led to a change in prices for old and new apartments, with the growth rate of prices for old apartments being higher than for new ones in 2023 (14.5% and 12.7%, respectively).
In the first quarter of 2024, the situation changed again: the growth rate of prices for new apartments (up to 5 years old) was slightly higher – 10.8% compared to old apartments (10.1%). During the same period prices in Athens grew, but at a significantly lower rate than the national average (9.4% instead of 10.3%), but their level exceeded the historical maximum of the second quarter of 2008.
In contrast, the Thessaloniki region and other regions of the country recorded higher annual growth rates than the average for Greece as a whole (12.2% and 12.1% respectively).
The dynamics of the residential real estate market in 2023 and the first months of 2024 are reflected in both Golden Visa data and other relevant indicators. In particular, in the first quarter of 2024, net foreign direct investment in Greece (data from the Bank of Greece) in the real estate market showed a positive annual rate of change (4.6%) and amounted to EUR 520 million, compared to EUR 497 million in the corresponding period in 2023.
3-room apartment 68 sq.m in Corinth 77,000 euros
Construction activity
In January-February 2024, activity in the housing construction sector (data ELSTAT) continued to grow significantly at the national level, recording an annual growth of 47.3% in construction volume and 60.9% in permits, while in the Attica region the corresponding growth was more moderate (6.5% and 18.9 %).
In contrast, residential investment (seasonally adjusted ELSTAT data at constant prices) fell 14.0% year-on-year in 1Q2024 and remains low as a percentage of GDP (1.7%).
The IOBE Housing Business Expectations Index for the first five months of 2024 recorded a slight decline (0.2%) compared to the corresponding period in 2023.
The total cost of construction of new residential buildings (ELSTAT data) in the first quarter of 2024 continues to increase (4.0% year on year), but shows a significant slowdown compared to the corresponding period in 2023 (8.1%).
The total volume of new mortgage loans increased by 38.9% in January-April 2024 compared to the same period in 2023 (7.2%), although it remained at a low level.
Finally, rising interest rates contributed to nearly two years of decline in mortgage demand, according to the Bank Lending Survey. However, in the first quarter of 2024, mortgage demand was unchanged from the previous quarter and is expected to remain unchanged in the next quarter, according to the same study.
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