Real estate: why there is not enough housing [график]

Airbnb, real estate collateral due to “red” loans and limited construction of new housing – these are three main factors of the housing crisis.

At the same time, the “freeze” caused by the decision of the Council of Ministers on new building standards, combined with rising prices for materials and energy, led to a historical low in construction.

The result is a market that operates under conditions of artificial scarcity: prices rise not because demand has increased, but because supply is insufficient.

Property report

The Bank of Greece’s financial stability report said the sharp decline in property supply is due to the fact that thousands of properties pledged against non-performing loans are in the portfolios of banks and servicers and have not been put on the market. While many are destined for auction, most remain dormant for years until legal or technical procedures are completed.

The second reason is investment exploitation of housing, either through short-term rentals or through foreign investment schemes, which are absorbing an increasingly large part of the available supply. Homes that were rented to families just a few years ago are now being used as tourist sites, adding to the shortage in the long-term housing market.

The low level of new housing construction is another factor exacerbating the problem. In the first half of 2025, construction activity decreased by 14% in the number of permits, by 24% in area and by 17% in volume.

Prices

Apartment prices rose 7.3% year-on-year in the second quarter of 2025, surpassing the all-time high set in 2008. Prices for new apartments increased by 6.8%, and for old ones – by 7.6%, while the corresponding index was 104.5 points. In Athens the increase was 5.9%, in Thessaloniki and the rest of the country – 8.8%.

Similar dynamics are observed in the rental sector, where the price index amounted to 114.7 points, which is ten points higher than last year, approaching the levels of 2011.

As a result of price dynamics in the property market, Greek households face the highest housing burden in Europe.

According to the Bank of Greece, 35.5% of their income now goes towards housing, and almost one in three pays more than 40%. With 29% of citizens exceeding this threshold, Greece ranks first in the European Union, seven points ahead of second Denmark, according to Eurostat data cited by the Bank of Greece.

Data shows housing costs have become the biggest financial burden for Greek households as prices reach historic highs and the number of homes available on the market becomes increasingly scarce.

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