By Chrysostomos Tsoufis

Those who in 2023, while they could, did not proceed with the purchase of property because they did not want to “pay” capital gains, expecting that prices will fall, will find that they were probably wrong. In its report for 2023, the Bank of Greece estimates that the carousel of price increases in the real estate market, at least in the short term, will continue. It will continue mainly in the highest quality properties, but will “give a line” to the other categories as well.

The reasons behind the price hike – other than its strong response sponsored program MY HOME for the purchase of a first home – they are not expected to disappear soon, ie:

-The high investment interest mainly from abroad
-The low supply of high-end properties as a result of the memorable past which paralyzed everything
-The positive course of tourism
-The short-term lease

The BoE data shows that residential investment continued its upward trend with 20.7% against 33.7% in 2022. The report also notes that during 2023 significant investments in offices with certified bioclimatic characteristics were started or completed, hotels and high-end professional warehouses, while several sales of large areas were carried out for the development of new professional uses.

The same increasing trend construction activity follows. The increase in new building permits was 23.6% and the buildable volume was 16%. But with them, the construction materials also increase – 7.6% in 2023 and 11% in 2022 – but also the total cost of constructing new buildings – 6.2% in 2023 and 8.8% in 2022, which affects prices.

At the same time, inflation is expected to decline significantly, energy costs have almost returned to pre-crisis levels, and as long as geopolitical risks do not increase, the conditions for price increases remain supportive.

Upheavals in one/some of the above sectors combined with the price correction recorded in individual countries in Europe and elsewhere, possibly could simply limit the rate of price increase.

Prices that in 2023 increased by 13.4% last year compared to 11.9% in 2022 and 7.6% in 2021.

The price of new apartments – less than 5 years old – increased by 12.4% and that of older apartments by 14.2%.

Geographically, the highest growth rates were recorded in Thessaloniki with 16.2%, followed by the other major cities with 14.5% and Athens with 13.7%.

The increases might have been even greater if the banks could “support” them by granting loans. But new mortgages decreased in 2023 by 1.9%, while according to the data of the Bank Loans Survey, in the last 2 years there has been a continuous decrease in the demand for mortgages due to the increase in interest rates. Here, too, things are expected to change and an environment of price increases will be created since, as stated in the report, it is now only a matter of time before the ECB kicks back and starts reducing interest rates.

In this context, the report concludes by pointing out that additional measures are required from the State as the interventions so far to strengthen the supply and limit the investment demand for residential properties (short-term leases, Golden visa) will only moderate the growth rate of prices and possibly lead to price corrections locally.