H upward trend in residential real estate prices continued in 2023 at an accelerated pace and according to data from the Central Bank, apartment prices (in nominal terms) increased by 13.4% year-on-year, compared to an increase of 11.9% in 2022.

But the point that is of particular interest and determines the trends is that the steady increase in prices observed in recent years has not yet led them, according to convergent estimates, to “ceiling” levels. A fact that, as pointed out in successive studies which have seen the light of day, leads to the conclusion that in combination with the growth rates of the Greek economy and the resistance to new challenges, the upward trend in prices will continue.

A decisive contribution to the increase in real estate prices is the demand for high-end real estate from both foreigners and Greeks, as well as the fact that real estate prices in Greece are still significantly lower than in other European countries.

In particular, with regard to the development of real estate prices in Greece, according to the most recent estimates of the Bank of Greece, the conditions of increased inflation and construction costs, as well as high interest rates, negatively affect the investment profit margin, which may gradually affect the prices of the domestic market, which in recent years has been significantly fueled by foreign investment. In the short term, however, prices are expected to continue their upward trend as long as foreign demand remains strong, the BoE estimates.

House prices are still far from the all-time highs recorded before the financial crisis

The BoE points out in the latest Financial Stability report that house prices in Greece are still far from the historic high recorded before the financial crisis.

Based on the apartment price index compiled by the Bank of Greece for the entire country, the highest value of the index was observed in 2008 (101.7) and then followed a steady downward trend until 2017 (59). Since then, the apartment price index has recorded a steady upward trend, reaching 92.0 in 2023, 9.7% lower than the highest value it has taken. The evolution of the level of rents is similar, with the relative index being 99.6 based on the data of the fourth quarter of 2023, against 94.9 in the fourth quarter of 2022.

The rent index, in contrast to the housing price index, remains significantly lower than the highest value it has reached historically (124.3 in the third quarter of 2011).

Strong “lure” for foreign buyers, the future capital gains of holiday homes in Greece

This year, the holiday home market in Greece is developing into a “magnet” for foreign real estate investors. The preference for higher-end properties also translates into higher selling prices, with those interested choosing luxury and higher-cost homes, from 350,000 to 550,000 euros.

In particular, according to a new analysis of the company selling holiday homes Elxis-At Home In Greece, this happens for a number of reasons, beyond of course the appeal that the Greek landscape and the country’s beauties have to the foreign market. “A key reason is that the sale prices, even at the high level of €550,000, remain highly competitive compared to other southern Mediterranean countries. Properties with a private pool, amenities and facilities, near or with a sea view, cost more than 40% more, in countries such as Italy and Spain”, Mr. George GavrielidisCEO of Elxis.

According to the company, another reason for the shift to more expensive properties is certainly the fact that the vast majority of its customers buy “off the plans”. These purchases ensure a lower price for the buyer, up to 15%-20%, which in turn, offers the prospect of a higher return, but also a greater capital value, in case someone wants to resell the property later. In fact, some buyers have already rushed to sell their holiday homes, even a year after their purchase, due to the large appreciation observed. Such a move was made in May this year, as the company typically states. The Dutch owners of a villa in one of the residential complexes promoted by Elxis chose to sell their property for €325,000, reaping a 47% capital gain compared to 2021, when the particular house was acquired. The only difference was that the property was sold furnished, while it was purchased empty. In the area of ​​southern Rethymno, a newly built villa of 80 sq.m. with three bedrooms, two bathrooms and a swimming pool, it costs 327,000 euros today. A property with similar characteristics in the same area was sold last year for 280,000 euros and in 2022 for 265,000 euros. The increase reaches 23.3% compared to 2022 and 16.7% from last year, allowing owners to make significant profits, in eventual resale, already in the first year of their investment. Primarily, those who are placed in holiday homes today are businessmen aged between 50 and 65, who have the same use as a priority. Also, an important buying group, are younger buyers, aged 35 to 45, with high incomes, who look not only to the same use, but also to holding for a period of time and later reselling at a tax-free capital gain.

Based on Elxis data, the sale prices of holiday homes in Greece are expected to increase at an average annual rate of 8% – 10% in the coming years, a performance that certainly acts as a pole of attraction for foreign investors. “Many of our clients consider this period to be perhaps the last opportunity they will have, to acquire a unique holiday home in Greece, at a highly competitive price, which will allow them not only to secure a good net annual return (at least 4%) from its exploitation, but also significant profits from a future resale of it in a few years from today”, concludes Mr. Gavrielidis.

Characteristic of the high demand for luxury properties of modern specifications is the exhaustion of all the properties that came up for sale in Hellinikon in the first months of the start of the urban renewal projects (skyscraper apartments, villas and residences), as stated by the managing director of Lamda Development Odysseus Athanasiou speaking last week to the British channel SKY News. The sales have already brought in 700 million euros and as Mr. Athanasiou mentioned, about 500 additional medium-scale properties have been put on the market with pre-sales going, as he said, surprisingly well.

New stations on the investment map of Athens

New “stations” on the investment map of Athens in the real estate sector result from data released by the real estate development platform Protiopresenting trends in income properties for the first quarter of 2024.

After the collection and study of data on income properties, in the Attica region, from January to March, as reported by Protio, the areas with the greatest investment interest based on property performance emerge.

Specifically, at the top of the list of regions with the highest yield of income properties is America Square with 6.9% and followed by area of ​​the Polytechnic with 6.6%. For the first quarter of 2024 Lark and its up-and-coming neighborhood Attica Square remain on the highest-yielding list, yielding 6.3%.

At the same time, for this period of time that is examined the Egaleo and the Victoria Square remain protagonists, with yields of 6.1% and 6% respectively, a result due to the continuous expansion of the boundaries of the center of Athens. The specific indicators make the above regions excellent investment options.

In the same position is also the Doveone of the most populated areas of Attica, with a yield of 6%, and remains one of the most attractive investments for income properties with stable demand.

In the areas of the center of Attica, a new addition is area of ​​Zografouwith a yield of 5.8% due to a significant increase in rental prices in the area, while the yield of Too much with 5.7%, an area which is expected to develop further with the arrival of the new metro.

In addition to the areas that lead and are in center of Athens and the surrounding areas, a new area of ​​the Northern Suburbs of Attica is now added to the list.

THE Ekali appears dynamically for the first time with a yield of 5.8% due to a noticeable increase in rental prices in the area. The new addition highlights the dynamics of investment in income properties in the northern suburbs of Attica as well. Through Protio’s analysis, an interesting change in investment trends is also observed for the first quarter of 2024, where rising regions maintain a consistently high ranking and at the same time new regions attract the interest of investors.

Its research also recognizes the increase in demand from abroad Cerved Property Services presented at the 17th Red Meeting Point by Dimitris Andritso, CEO of CPS. The survey also shows the position of domestic buyers. In particular, according to the conclusions of the research, average Greek incomes today do not correspond to the increased house prices. On the contrary, for non-domestic buyers they are still attractive. As the research reports, according to the data of the CPS Sustainability Index the price level of 2021 is the upper limit for Greek households. Based on the value of a property, the price level of 2021 for an average house (about 60 sq.m. and aged 20-30 years) for the purpose of owning, about 8.5 years of income is required to buy it, in line with the European averages. The research estimates, among other things, that the maintenance of low transaction volumes and the current mix of foreign and domestic investors in the market create conditions for upward pressure on real estate prices.