By Chrysostomos Tsoufis

With the housing crisis in full swing, the government chose to “stimulate” the supply side only from the older building side.

And tax incentives for repurposing homes on the market and programs MY HOUSE 2 and Renovate Rent are related to the existing “fleet”. In terms of new housing supply of the 45 new announcements of the Prime Minister in TEFonly one concerns the construction of new homes, its suspension VAT for 2025 (There is also the Social Compensation program but from the first indications it will probably move at a slow pace and on a small scale) with the market players declaring themselves reasonably disappointed.

At the same time, the market is going through “dramatic” moments. The only positive point is that in the first 5 months of the year new building permits are running at an increase of 13.5%. Market players say the trend for new licenses will wane as they expected the VAT suspension to be indefinite or at least 2 years. “What can you do in advance when, depending on the mayor you fall under, it may take 6-8 months to get her out” they said characteristically on skai.gr.

The other issue is when and how these permits will be implemented.

Based on the data of real estate developers, they are currently missing around 150,000 workers, both unskilled and skilled workers of all specialties. “In the contracts we make, we put a condition in the contract that we will hand over the property within three years, explaining to the customer that we cannot find repair shops,” builders tell us. A few years ago this term – if it existed – referred to delivery within 15 months.

Many licenses are reserved to the municipalities as they have provisions based on its provisions New Building Regulations but the constitutionality of which will be judged at a plenary meeting of the CoE. The plenary is expected to meet in October and no one knows when it will decide. In the meantime, all this time the holders of these licenses will be in a kind of hostage situation. 400 such licenses are reserved e.g. according to our information in the municipality of Kifissia, the number is similar on the southern front. And as they typically tell us, by the time the Supreme Court decides, the VAT suspension will have passed.

At the same time, the construction costs keep increasing. Indicatively, in the second quarter of this year and according to ELSTAT’s data, the price index for the construction of new buildings has increased by 3.7%. 2.2% are increased fees and 5.5% materials.

Only in July there were increases:

  • 12.5% ​​in bricks
  • 9% on copper conductors
  • 7.8% in plastic pipes and radiators
  • 6.7% on switches
  • 6.3% on glass panes
  • 6.1% in water heaters
  • 5.6% in cement and tiles
  • 5.4% in frames
  • 4.7% on marble slabs

All of the above have their effects on the prices which are in an upward rally. Especially the issue with the CoEs and the new building regulation hides “inside” new increases.

Let’s say someone has a building permit for 1000 sq.m. of a plot of land which he has bought for €500,000. If the SC’s decision limits him to building 650-700 sq.m., he may apportion the loss of surface area to the sale price, leading to an increase in prices.

It is not surprising after all this that the Bank of Greece announced that in the second quarter of the year property prices rose again by 9.2%. An increase that will be added to the 13.8% in 2023, while we also had increases in 2022 and 2021 and so on.

Manufacturers are asking the government to put pressure on banks to reduce lending rates because as they say with interest rates of 6-7%, “there is no market”.